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If you've got a dormant company sitting on the shelf, you might be wondering whether to keep the business bank account open, or whether having one at all could cause you problems. It's a fair question. A dormant company still exists as a legal entity, but the rules around what it can and can't do with a bank account trip up a lot of directors.
Let's clear up the confusion with this practical guide to dormant company bank accounts, including what "dormant" actually means, what happens if the bank pays you a few pence in interest, and what to do once you're ready to trade again.
What is a Dormant Company?
A dormant company is one that's registered at Companies House but isn't currently trading or generating income. Confusingly, Companies House and HMRC each apply a slightly different test, and it's worth understanding both before you decide what to do with your bank account.
Companies House definition | HMRC definition | |
|---|---|---|
What counts as dormant | No "significant accounting transactions" during the financial year | Not carrying on business or receiving income (dormant for Corporation Tax) |
Permitted exceptions | Payment for subscriber shares on incorporation, and fees paid to the Companies House Registrar | None specifically, but preliminary activities like writing a business plan or negotiating contracts don't count as trading |
What you must still do | File dormant accounts (form AA02) and a confirmation statement each year | Tell HMRC the company is dormant, so it stops issuing Corporation Tax notices |
It's worth noting that Companies House takes the narrower, stricter view. Under the Companies Act 2006, the only transactions that don't break dormancy are the initial payment for subscriber shares and fees paid directly to the Registrar. Everything else, including bank interest, bank charges, insurance premiums and accountancy fees, counts as a significant transaction.
Can a Dormant Company Have a Bank Account?
Yes, legally, a dormant company can hold a business bank account. The account itself isn't the problem. What breaks dormancy is what happens inside it.
In practice, this makes keeping an account open riskier than it sounds. Even a small amount of bank interest, a monthly account fee, or an automatic charge can count as a significant transaction, which means your company is no longer dormant for that financial year, even if you never intended to use the account for anything.
For most dormant companies, the simplest way to stay compliant is not to have an active business bank account at all. If you've got the odd small expense while the company is dormant, it makes more sense to pay it from your personal account and keep the receipt, so you've got a clear record if the business becomes active again.
What Counts as a Significant Transaction?
Breaks dormancy | Doesn't break dormancy |
|---|---|
Bank interest credited to the account, however small | Payment for shares by the initial subscribers |
Monthly account or card fees | Fees paid directly to Companies House (confirmation statement) |
Payments to suppliers or employees | |
Money received from customers | |
Bank charges of any kind |
If you do decide to keep the account open, for example because closing and reopening one is administratively painful, ask your bank in writing whether it can apply a zero-interest, zero-fee arrangement. Not all banks offer this, and it's worth confirming before you rely on it.
Should You Close or Keep the Account While Dormant?
There's no single right answer here, and it depends on how long you expect the company to stay dormant and how confident you are about avoiding stray transactions.
Reasons to close the account:
Removes the risk of accidental interest or fees ending your dormant status
No need to monitor statements or chase the bank about zero-fee terms
Straightforward to reopen a new account, or the same one, when you start trading again
Reasons to keep the account open:
Useful if you're planning to resume trading imminently and want continuity with existing suppliers or customers
Some banks carry out know-your-customer (KYC) reviews on dormant accounts and may close them anyway if there's no clear ongoing purpose, so keeping one open isn't a guarantee it'll still be there when you need it
Avoids the admin of a fresh account application, including proof of ID, address and business details
If you're planning to keep the company on the shelf for more than a few months, closing the account is generally the lower-risk option.
What Happens When Your Dormant Company Becomes Active?
As soon as your company starts trading, meaning it gets paid, spends money, or takes on any income-generating activity, it stops being dormant. You'll need to:
Notify HMRC within 3 months that the company has started trading, so it can be brought back into the Corporation Tax system.
Open a business bank account if you don't already have one. A limited company is a separate legal entity from you, so its finances can't be mixed with your personal account once it's active.
Keep proper records of income and expenditure from the day trading resumes.
File full statutory accounts at your next Companies House deadline, rather than the simplified dormant accounts (AA02) you'd file while inactive.
Dormant Company Filing Obligations in 2026
Even while dormant, your company doesn't disappear from Companies House's radar. Fees changed from 1st February 2026, and it's worth having the current figures to hand.
Filing | Requirement | Cost (2026) |
|---|---|---|
Confirmation statement | Due at least once every 12 months, for every registered company, dormant or not | £50 online, £110 by paper |
Dormant accounts (AA02) | Simplified balance-sheet-only accounts, due 9 months after your accounting reference date (21 months for a first set of accounts) | Free to file |
Voluntary strike-off (DS01) | Optional, if you decide to close the company instead of keeping it dormant | £13 online, £18 by paper |
Late filing penalty | Applies from the day after your deadline, starting at £150 for a private limited company | Increases the longer the delay |
We sourced these figures from Companies House's fee schedule following the 1 February 2026 changes. The confirmation statement fee rose from £34 to £50 for digital filing, while the voluntary strike-off fee dropped to £13, making dissolution a cheaper option than it used to be for directors who no longer need the company.
Best Business Bank Account When You Start Trading Again
Once your company is about to trade, you'll need an active business account. There are far more options than there used to be, and it's worth comparing them on a few specific points rather than picking whichever bank you already use personally.
1. Low or No Monthly Fees
Several fully authorised UK banks now offer business current accounts with no monthly fee on an ongoing basis, not just as an introductory offer. Others waive fees for the first 12 to 24 months. If you're starting slowly, a free account removes one fixed cost while you find your feet. Our free business bank accounts guide compares the no-fee options currently available.
2. Simple, App-First Banking
Digital challenger banks generally offer faster setup, better apps and lower fees than traditional high street providers, and most still let you pay in cash at a Post Office branch if you need that option occasionally. Our best startup bank accounts guide covers the providers built for exactly this stage.
3. Built-In Tools for Small Businesses
Some small business bank accounts include invoicing, expense tracking or direct integration with accounting software such as Xero, QuickBooks or FreeAgent. If you're VAT-registered, this also matters for Making Tax Digital, which has applied to VAT-registered sole traders since April 2026.
4. FSCS Protection
Check that any account you choose is covered by the Financial Services Compensation Scheme (FSCS), which protects eligible deposits up to £120,000 per depositor following the December 2025 limit increase. Most UK-licensed banks offer this; some e-money institutions use a different safeguarding model instead, which is worth understanding before you commit.
Misconceptions About Dormant Company Bank Accounts
"A dormant company isn't allowed to have a bank account." Not true. It's legal to hold one. The risk is what happens inside it, not the existence of the account itself.
"Bank interest doesn't count because it's not really a transaction." It does count. Companies House and HMRC both treat interest, however small, as a transaction that can end dormant status for that financial year.
"Dormant companies don't need to file anything with Companies House." They still need to file a confirmation statement every 12 months and dormant accounts (AA02) each year, even with zero activity to report.
"You can't reopen a dormant company once it's dormant." You can reactivate at any point by notifying HMRC and Companies House, without reincorporating or losing your company name, provided you haven't struck it off the register.
FAQs About Dormant Company Bank Accounts
Does a dormant company need a business bank account?
No. There's no legal requirement to hold one while dormant, and not having an account is usually the simplest way to avoid accidentally ending your dormant status.
What happens if my dormant company's bank account earns interest?
Even a small amount of interest counts as a significant transaction for Companies House purposes, and as income for HMRC's Corporation Tax test. This can mean the company is no longer classed as dormant for that financial year.
How much does it cost to keep a company dormant in 2026?
The main ongoing cost is the confirmation statement, which is £50 a year for online filing. Dormant accounts (AA02) are free to file, but late filing triggers penalties starting at £150.
Do I have to tell HMRC my company is dormant?
Yes. HMRC doesn't automatically know a company has stopped trading, so you need to notify them directly, either online or in writing, to stop Corporation Tax notices being issued.
How quickly do I need to act if my dormant company starts trading again?
You should notify HMRC within 3 months of the company becoming active again, and open a business bank account before you start mixing the company's money with your own.
Is it cheaper to strike off a dormant company instead of keeping it?
Sometimes. Voluntary strike-off (DS01) now costs £13 online, which is less than several years of confirmation statement fees combined. It's worth considering if you have no real plan to reactivate the company.
In Summary
If your company is dormant, the simplest and lowest-risk approach is not to hold a business bank account at all. Keeping one open, even with the best intentions, creates a real risk that a stray interest payment or bank fee will end your dormant status without you noticing until your accountant asks why.
Once you're ready to trade again, opening a new account is straightforward, and there are more free and low-cost options available than there used to be. Compare a few providers on fees, features and FSCS protection before you commit, since eligibility and pricing can change.
