Bank interest and dormant companies: does interest stop the company being dormant?

By Max Szolcek, founder of Dormant Return. Last updated 15 September 2026

For HMRC, yes. A company is only dormant for Corporation Tax if it has no other income, and gov.uk lists getting interest among the things that count as trading. There is no small-amount exception. A company whose bank account earned £3 in the year is not dormant for that year, and the return it owes is a full one. Here is why, and what to do about it.

What gov.uk actually says

HMRC's definition has two limbs. A company is usually dormant for Corporation Tax if it has stopped trading and has no other income, for example from investments, or if it is a new company that has not started trading. Then the page spells out what trading includes: buying, selling, renting property, advertising, employing someone or getting interest.

Two things follow. Interest is "other income", so a company earning it fails the first limb. And getting interest is itself listed as trading, so it fails the second limb too. It does not matter that the company did nothing to earn it beyond having an account. The bank paid income to the company; the company had income.

The amount is irrelevant to the test. Dormancy is a yes-or-no status, not a threshold. Whether any tax is actually payable on a few pounds is a separate question and, in practice, a small one, but the return still has to be a proper one.

Companies House takes the same view

Companies House calls a company dormant if it has had no significant accounting transactions in the financial year, and its list of transactions that do not count is short: filing fees paid to Companies House, penalties for late filing, and money paid for shares when the company was incorporated. Interest received is not on that list. A credit of interest is a transaction in the company's books, so a company that received interest cannot file dormant accounts for that year either. It files ordinary accounts, which for a tiny company usually means micro-entity accounts.

The two regulators define dormant differently in general, and a company can be dormant for one and not the other; the differences are set out in dormant for Companies House vs dormant for Corporation Tax. Interest happens to fail both tests.

The three situations, and what each one files

1. The company traded and its account also paid interest

This is the ordinary case of a small trading company. It owes HMRC a full Company Tax Return: a CT600, accounts tagged in iXBRL, and a tax computation showing how the figures were arrived at. If the company made a loss or came out at exactly nil, some of that loss can be set against the interest so that no tax is due, but the computation has to show the working.

Dormant Return files this shape for £15, provided the company has one UK trade, micro-entity accounts already filed at Companies House, and profits within the small profits limit; a loss, nil or a small profit all work, and any tax due is worked out and shown. Bank interest alongside the trade is fine. The conditions and what to have ready are in company traded, loss or small profit: what to file.

2. No trade at all, just interest on the balance

A company that stopped trading years ago but left its cash in an interest-bearing account is in the awkward middle. It is not dormant, so it owes a full return with a computation, and with no trading loss to set against the interest, Corporation Tax on the interest is likely to be due. The sums are small, but the return is not simplified because of that.

Dormant Return files this shape for £15. You re-key the bank interest, the costs and the balance sheet from the micro-entity accounts already filed at Companies House; the service builds the CT600, the iXBRL accounts and a tax computation that charges the interest at the 19% small profits rate, and files the lot to HMRC under your own Government Gateway sign-in. Costs in the accounts are not deducted from the interest (with no trade there is nothing to set them against, and no expenses-of-management claim is made), so the tax is never understated. The conditions: a UK company limited by shares with no associated companies, no trade and no income other than bank interest, a period of 12 months or less, interest under the small profits limit, and no losses brought forward or reliefs to claim.

The tax itself is paid to HMRC separately, nine months and one day after the end of the accounting period, at gov.uk/pay-corporation-tax using the 17-character reference on HMRC's notice to deliver or in the company's business tax account. Filing the return does not pay it, and the receipt tells you the amount and the deadline. Once the return is filed, move the money to a non-interest-bearing account so that next year the company is dormant again.

3. The account paid no interest

Then the cash is just cash. Holding money is not income and not a transaction, and the company stays dormant for both regulators. Its accounts still have to show the balance, which is covered in dormant company with money in the bank, and its CT600, if HMRC asks for one, is the ordinary dormant one.

No interest, no income, nothing happening? Dormant Return files the dormant CT600 with iXBRL accounts for £5, including a balance sheet if the company holds cash. If the account paid interest, with or without a trade, the £15 return covers it, computation included. All three are filed to HMRC under your own Government Gateway sign-in and refunded automatically if HMRC rejects the return.

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The practical fix: a non-interest-bearing account

Most of the trouble here is avoidable. A dormant company that must keep a bank account, because it holds cash or because the director wants to keep the company alive, should keep it in an account that pays no interest. Many business current accounts pay none by default. If yours pays interest, ask the bank to switch the account type or move the balance.

Check the statements before you declare dormancy, not after. A single interest credit of a few pence, easy to miss on a statement, is enough to turn a dormant year into a full-return year. If you find one, the honest course is to file the full return for that year and fix the account so it does not recur.

What this does not change

Whether any return is due in the first place still turns on HMRC's notice to deliver a Company Tax Return, explained in do dormant companies need to file a CT600?. Interest does not create a return out of nothing; it changes what kind of return is owed once HMRC asks for one, and it means you should not tell HMRC the company is dormant for a period in which it received interest. Late-filing penalties apply to the full return in exactly the same way as to a dormant one.