Business bank account for a dormant company: do you actually need one?

A genuinely dormant company usually doesn't need a business bank account. A company that's about to trade probably does. The awkward bit is working out which one you really have.

By Sam Morris

If your limited company is genuinely dormant and has no trading planned, you usually don't need a business bank account.

In fact, opening one just to keep the company sitting there can create more admin than it solves. Bank charges, interest, tiny transactions and random payments can all make a supposedly dormant company less clean than it looked on paper.

But if the company is only dormant because it's new, pre-trading or waiting for its first customer, the answer changes. Once money is about to move, the company should have its own business account.

That's the simple version: no real activity, no real need. Trading soon, open the account properly.

What does dormant company mean?

Dormant sounds simple, but it's one of those words that means slightly different things depending on who is asking.

Companies House and HMRC both use the idea of dormancy, but they don't look at it in exactly the same way.

Dormant for Companies House

For Companies House, a company is dormant if it has had no significant accounting transactions during the financial year.

A significant accounting transaction is basically something that should go into the company's accounting records. Normal business income, supplier payments, bank charges, interest, rent, software subscriptions and professional fees can all matter.

A few things don't count for Companies House dormancy. Filing fees paid to Companies House, penalties for late filing of accounts, and the money paid for shares when the company was incorporated are ignored for this purpose.

So a company can exist, have shareholders, file dormant accounts and remain on the register without being active in a commercial sense.

Dormant for HMRC

For Corporation Tax, HMRC generally treats a company as dormant if it has stopped trading and has no other income.

That's a slightly wider practical test. If the company is earning money, receiving income, making investments, paying costs or carrying out business activity, HMRC may not treat it as dormant just because the director thinks of it as "not really trading".

Don't get cute with this. If money is moving, speak to an accountant before assuming the company is dormant.

Does a dormant company need a business bank account?

Usually, no.

A genuinely dormant company doesn't have customers, suppliers, payroll, rent, software costs, VAT payments, Corporation Tax payments or trading income. If there's no money moving, there isn't much for a bank account to do.

This is different from a normal limited company. A trading company should have its own business account because the company is legally separate from its directors and shareholders. We cover that in more detail in do you need a business bank account for a limited company?.

A dormant company is different because it isn't trading. The practical risk is that opening an account creates transactions that make the dormant position messier.

There's also a bank eligibility problem. Many providers want active or soon-to-trade businesses. Some app-based providers explicitly say they don't support dormant companies. Others ask for expected turnover, business activity and trading details during the application. If you can't answer those properly, the application may go nowhere.

The cheapest and cleanest answer for a genuinely dormant company is often: don't open an account yet.

The three common situations

Most dormant company questions fall into one of three buckets.

1. Newly incorporated but not trading yet

This is the easy one.

You've just incorporated the company. You're waiting for your first client, first invoice, first property purchase or first contract. Technically, the company may not have traded yet. In everyday language, you might call it dormant.

But if trading is about to start, open a business account.

Banks are used to new companies. They may ask what the business will do, expected turnover, who the directors are, where money will come from and when activity starts. That's normal.

If you're at this stage, read business bank account for a new limited company. That's the more relevant guide than a dormant-company article.

2. Genuinely dormant with no plans to trade

This is the name-protection company, paused idea, old shell company or "maybe one day" limited company.

There are no clients. No invoices. No costs. No income. No property. No contracts. No plan to start trading in the next few weeks.

In that situation, a business bank account is usually unnecessary.

Opening one may create small charges, card activity, interest, accounting records and extra questions later. It can also make the company look less dormant than you intended.

If the company exists purely to protect a name, hold a future idea, or sit quietly until you decide what to do, leave banking until there's a real business reason.

3. Paused company that used to trade

This is more awkward.

Maybe the company traded before Covid and then stopped. Maybe you took a permanent job. Maybe the business has no current customers but still has an old bank account, a small balance, final supplier refunds or an HMRC payment to clear.

In that case, don't rush to close the account without thinking.

Keeping an existing account can be useful if there are final payments, refunds, tax payments, old subscriptions or a realistic plan to restart. It also preserves a clean company audit trail.

But if the company is genuinely finished and you want it dormant, ask whether the account is still doing anything useful. A bank account with monthly fees or small transactions can turn into a nuisance.

What about SPVs and holding companies?

This is where "dormant" gets messy.

A property SPV may be incorporated before it buys its first buy-to-let property. Until the purchase happens, there may be no trading activity. But once mortgage funds, legal fees, rent or property costs start moving, the company needs proper banking.

If that's your situation, read SPV business bank accounts for buy-to-let. A property SPV isn't the same as a name-protection company sitting empty forever.

Holding companies are another grey area.

A company might look quiet but still hold shares in subsidiaries, receive dividends, make intercompany loans, pay professional fees or own assets. That may be very different from a genuinely dormant company with no activity.

If the company receives dividends or moves money inside a group, don't treat it as a simple dormant company. It may need a bank account, and it definitely needs proper accounting advice.

Will banks open an account for a dormant company?

Sometimes, but don't assume they will want to.

Banks open business accounts for businesses that need banking. A company with no trading, no expected income and no clear activity can look like a poor fit.

Some providers ask whether the company is active, what it sells, when it started trading, expected monthly turnover, source of funds and who will pay into the account. If the true answer is "nothing is happening", the bank may decline the application or ask for more information.

This isn't necessarily unfair. Banks have anti-money-laundering and account-monitoring obligations. Dormant or inactive companies can create compliance questions, especially if they later receive unexplained payments.

Existing accounts can also be reviewed. A bank may ask whether the business is still operating. It may restrict or close accounts with no meaningful activity under its normal account-management process.

The practical point is simple: if the company is genuinely dormant, don't open an account just because you think every limited company must have one.

Does opening a bank account stop the company being dormant?

Opening the account alone isn't usually the problem. Transactions are the problem.

If the account receives income, pays suppliers, earns interest, incurs charges or has normal business movement, those transactions may be significant accounting transactions. That can affect whether the company is dormant for Companies House accounts.

This is where directors get caught.

They open an account "just in case". The bank charges a fee. A tiny amount of interest appears. A software subscription is paid from the company card. Suddenly the accounting position is less clean.

There are exceptions for Companies House filing fees, late filing penalties and share capital paid on incorporation. But normal banking activity isn't automatically ignored.

So if the aim is to keep the company dormant, avoid unnecessary account activity.

What about Companies House filings?

Dormant doesn't mean you can ignore Companies House.

A dormant company still needs to file accounts. Until 31 March 2026, dormant companies could file simple dormant accounts free of charge through the Companies House WebFiling service. That route closed on 1 April 2026.

From April 2026, all UK companies — including dormant ones — must file accounts using commercial software that produces accounts in iXBRL format. Some providers offer free or low-cost filing for simple dormant accounts. Others charge a per-filing fee or monthly subscription. Practical options include TinyTax, Easy Digital Filing, Xero, FreeAgent and Sage, among others.

The company also still needs to file a confirmation statement every year. The digital confirmation statement fee rose to £50 from 1 February 2026.

That annual compliance cost isn't really a banking issue, but it matters for directors keeping a company on the shelf. A dormant company is low-admin, not no-admin.

If you don't think you need the dormant company any more, the digital voluntary strike-off fee dropped to £13 from 1 February 2026. Closing the company can be cheaper than running it on indefinitely.

What should you do before the company starts trading?

Once the company is about to wake up, do the banking properly.

Before the first invoice, customer payment or supplier bill, you should:

• Open a business account in the company name
• Tell HMRC if the company becomes active for Corporation Tax
• Connect accounting software if you use it
• Keep personal and company money separate
• Update your accountant or bookkeeper
• Set up a tax pot for Corporation Tax, VAT or PAYE if relevant
• Issue invoices from the company, not personally
• Stop using a personal account for company activity

This matters because a limited company is legally separate from you. Once trading starts, the company's money isn't your money.

If you're still at the planning stage, waiting until trading is realistic is fine. But once the company has real activity, don't run it through a personal account "just for now".

Does Making Tax Digital matter here?

Usually, not much.

Making Tax Digital for Income Tax doesn't apply to limited companies. A dormant limited company isn't suddenly pulled into MTD for Income Tax because it exists at Companies House.

MTD for Corporation Tax has been shelved. VAT MTD can matter if the company is VAT-registered, but a genuinely dormant company usually won't be running VATable trading activity.

So MTD isn't the reason to open a bank account for a dormant company. The real reason to open one is that the company is about to start receiving or spending money.

Our view

Don't open a business bank account for a genuinely dormant company just because the company exists.

If the company has no trading plan, no income, no costs and no assets moving through it, no account is usually cleaner. It reduces the risk of accidental transactions, avoids pointless fees and keeps the dormant position simpler.

If the company is pre-trading and activity is about to start, open the account properly. A new limited company that's about to invoice clients, buy stock, buy property or pay suppliers isn't a long-term dormant company. It's a business waiting to begin.

If the company is a paused trading company, property SPV or holding company, be more careful. Those situations can look dormant from a distance but still involve money, assets or future transactions.

The worst option is pretending a company is dormant while quietly putting transactions through it. That's how you end up with messy accounts and an accountant asking why there's a bank charge in a dormant year.

FAQ

Does a dormant company need a business bank account?

Usually, no. If the company is genuinely dormant and has no income, costs or planned trading activity, a business bank account is normally unnecessary.

Can a dormant company have a bank account?

Yes, a dormant company can technically have a bank account. The issue is whether the account has any activity. Bank charges, interest or payments can create accounting transactions that make dormancy less straightforward.

Will opening a bank account stop my company being dormant?

Not necessarily. But transactions through the account may count as significant accounting transactions. If you want the company to remain dormant, avoid unnecessary banking activity.

Can banks close dormant business accounts?

They can review, restrict or close inactive business accounts under their normal account-management processes. If the company is no longer trading, it's sensible to keep the bank informed and decide whether the account is still needed.

Should I keep my old company bank account open if I stop trading?

Only if there's a good reason, such as final payments, refunds, tax matters or a realistic plan to restart. If the account only creates fees and admin, keeping it may not be worth it.

Does a pre-trading company count as dormant?

It can be dormant before trading begins. But if you're about to trade, open a business account before money starts moving.

Does a holding company need a bank account?

Often, yes. If the holding company receives dividends, makes loans, pays professional fees or moves money between group companies, it isn't the same as a simple dormant name-protection company.

Can I still file dormant accounts for free on the Companies House website?

No. Companies House WebFiling for annual accounts closed on 31 March 2026. From 1 April 2026, all company accounts — including dormant ones — must be filed using commercial software that produces accounts in iXBRL format. Some providers offer free or low-cost filing for simple dormant accounts.

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Sam Morris is the pen name of the founder of comparebusinessbanking.com.