Dormant vs non-trading company: what is the difference?

By DormantFile · Updated 28 March 2026

"Dormant" and "non-trading" sound like they mean the same thing. They usually overlap, but they are legally distinct terms used by different bodies, and the difference matters for your filings.

"Dormant" — the Companies House definition

Under section 1169 of the Companies Act 2006, a company is dormant if it has had no significant accounting transactions during the accounting period.

The only transactions that do not count are:

• Payment for shares taken by subscribers on formation
• Fees paid to Companies House (such as the annual confirmation statement fee)

Everything else — any money in, any money out, including bank interest — is a significant accounting transaction.

If a company is dormant under this definition, it can file simplified dormant accounts with Companies House: a balance sheet showing nil figures and a statement that the company was dormant throughout the period.

"Non-trading" — the HMRC definition

"Non-trading" is not a formal statutory term in the same way, but HMRC uses it to describe a company that:

• Is not carrying on a trade or business
• Has no income from any source
• Has no chargeable gains

This is the definition HMRC applies when deciding whether a company can be treated as dormant for Corporation Tax purposes. If a company is non-trading, it may be able to file a nil CT600 return (or, in some cases, HMRC may not require a return at all — see our guide on whether you need a CT600).

Where they overlap

For most dormant companies, both definitions are satisfied at the same time. A company that was incorporated but never traded, has no bank account, and has done nothing since formation is:

• Dormant under the Companies Act (no significant accounting transactions)
• Non-trading for HMRC purposes (no trade, no income, no gains)

This is the straightforward case. File dormant accounts with Companies House and a nil CT600 with HMRC (if registered for Corporation Tax). Both filings confirm the same thing: nothing happened.

Where they differ

The two definitions can come apart. Here are the scenarios that catch people out:

Non-trading but NOT dormant

A company that is not carrying on a trade can still have significant accounting transactions. For example:

• A company that receives bank interest. It is not trading and has no business activity, but the interest is a significant accounting transaction. It is non-trading for HMRC purposes but not dormant under the Companies Act.
• A holding company that receives dividends from a subsidiary. It is not trading itself, but the dividend receipt is a transaction. Not dormant.
• A company that pays for a registered office service from its own bank account. The payment is a significant accounting transaction, even though the company is not trading.

In these cases, the company cannot file dormant accounts with Companies House. It needs full accounts showing the transactions, even though the transactions are small. However, it may still be treated as non-trading by HMRC, depending on the nature of the income.

Dormant but treated differently by HMRC

This is less common, but a company can be dormant under the Companies Act while HMRC still requires a CT600. For example, if HMRC has the company on its records as active and has issued a notice to deliver a return, you need to file one — even if the company is dormant and the return will show nil figures.

What it means in practice

The key question is always: has the company had any significant accounting transactions?

If the answer is no, the company is dormant and you can file simplified accounts. If the answer is yes — even if the company is not trading — you need full accounts and potentially a different type of CT600.

How to check

Our guide on how to check if your company is dormant walks through the common scenarios in detail, and our free Am I dormant? checker gives you a yes/no across both definitions in eight questions. The simplest test:

1. Look at the company's bank statements for the period. Any transaction (in or out) means the company is not dormant under the Companies Act.
2. If the company has no bank account and has made no payments of any kind, it is almost certainly dormant under both definitions.

If you are in the grey area — non-trading but with some transactions — you need an accountant. DormantFile handles genuinely dormant companies only, where there are no transactions to report.

Key points

• "Dormant" is a Companies Act term meaning no significant accounting transactions. "Non-trading" is an HMRC term meaning no trade, income, or gains.
• They usually overlap, but a company can be non-trading without being dormant (e.g., if it earns bank interest).
• If dormant under both definitions: file dormant accounts + nil CT600.
• If non-trading but not dormant: you need full accounts. Dormant accounts are not appropriate.
• When in doubt, check your bank statements. Any transaction means the company is not dormant.