Good question — and you’re right to think carefully here, because the tax treatment of the cash you take out is the main thing that separates the two routes.
Voluntary strike-off (DS01) is the cheap, simple route: £8 to file online, and the company is usually dissolved about 3–4 months later if nobody objects. It suits dormant companies or ones with little left in them.
But with cash left in the business, there are two catches:
- You must extract everything before the strike-off. Anything left in the company when it is dissolved passes to the Crown as ownerless property — you lose it.
- The £25,000 rule. Distributions made in anticipation of a strike-off are treated as capital (not income) only up to £25,000 in total. Go above that and HMRC taxes the extra as dividends, which can work out much more expensive.
A members’ voluntary liquidation (MVL) is the formal route for a solvent company with meaningful retained profits. A licensed insolvency practitioner is appointed, all creditors must be paid in full (you sign a declaration of solvency confirming this), and distributions to shareholders are taxed as capital gains rather than income. If you have held at least 5% of the shares for at least 2 years, Business Asset Disposal Relief may also apply and cut the tax rate.
Rough costs and timing:
- Strike-off: £8 filing fee, around 3–4 months to dissolution.
- MVL: liquidator’s fees are typically £1,500–£3,000 plus disbursements. Cash is usually distributed within days or weeks of appointment; the company itself is fully dissolved in around 6–12 months.
The practical threshold: if there is more than about £25,000 of cash and retained profits to extract, an MVL usually pays for itself because capital gains treatment saves more than the liquidator costs. Below that, a strike-off is normally fine.
Watch-outs either way: settle everything with HMRC first (final accounts, company tax return, PAYE/VAT closure), never strike off a company that owes money (creditors can object or have the company restored), and close the business bank account once the cash is out. If you are unsure, an accountant or insolvency practitioner can run the numbers both ways — it takes them ten minutes.
