Is a non-trading company different from a dormant company?


I’m not up-to-date on my company jargon. Looking to set up a limited company, but I’m just checking out all of the other stuff that goes along with it before I make my move. I’m looking at what happens to unsuccessful companies at the moment, and I’m trying to figure out whether there’s a difference between non-trading companies and dormant companies. They look pretty identical on paper. Is that actually the case?



Non-trading companies and dormant companies are slightly different, yet neither type is involved in regular trading activities or active for Corporation Tax.

A non-trading company has certain accounting transactions that need to be entered into its accounting records - rent, wages, utility bills, insurance, accountancy fees, etc - but it does not trade. It may begin trading at a later date, or it may remain non-trading for its entire existence for the purpose of holding assets or being the shareholder or guarantor of another company, for example.

A dormant company does not have any significant accounting transactions that require entering in its accounting records, with the exception of:

  • Payments from subscribers for their shares
  • Filing fees paid to Companies House
  • Penalties for late filing of annual accounts.

Companies are usually made dormant when someone wishes to protect a company name, reserve a company name for later use whilst preparing a business for future trading, or to take a break from normal business activities without closing the company.

2 years ago

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