Closing ltd company, questions regarding capital distribution and CGT

[AMPM]

I'm planning to close down the ltd company in next few months. Any idea what's involved in it please?

Accountant told me that they'd prepare the accounts, company will pay the CGT and remaining VAT and then I can get the money out of the company bank account. This whole thing can be done in one month. And then the company will struck off in next 3-4 months. Is that correct? Do I not have to wait till ESC16 or confirmation from HMRC before I take the money out?

Also, if the capital distribution is done before 5th April but the company closed down after 5th April, in which tax year the capital gain tax will be applicable for, the year in which the money was taken out or the year in which the company close down or the year in which HMRC approved the company closure (ESC16)?

Thanks.

[eazy]

Concession Request for ESC C16 is STILL required. 75% BATR has been abolished and been replaced by new CGT regime.

Now you pay CGT at 18% flat rate. However, entrepreneur's relief is available for for 1st 1Million (accummulative). This means you pay 10% CGT.

[AMPM]

Originally Posted by eazy

Concession Request for ESC C16 is no longer required since the new tax year. 75% BATR has been abolished and been replaced by new CGT regime.

Now you pay CGT at 18% flat rate. However, entrepreneur's relief is available for for 1st 1Million (accummulative). This means you pay 10% CGT.

Thanks. So, can I just pay VAT and PAYE, do the final accounts, pay corporation tax and pay myself capital distribution and then wait for company to be struck off?
Do I need no approval from HMRC before I take the money out?

[vhadiant]

What's the effective tax rate on the entrepreneur's relief? I mean do you pay 10% tax on top of the corporation tax?

For example on £100,000 you'd pay 21% CT = £79,000 left. Then another 10% on that? So that means your net is £71,100.

Is that correct?

[ASB]

Originally Posted by vhadiant

What's the effective tax rate on the entrepreneur's relief? I mean do you pay 10% tax on top of the corporation tax?

For example on £100,000 you'd pay 21% CT = £79,000 left. Then another 10% on that? So that means your net is £71,100.

Is that correct?

Well you pay CT at the time the profit is made.

You pay CGT at the time the distribution is made. The distribution can only ever come from ost tax profits of course.

[eazy]

Prepare your final accounts, pay all the taxes and all other liabilities. The final amount left is available to distributed.

As ASB have stated above, you will have to pay 10% CGT on top of corporation tax.

[munglefish]

When you have closed the company and taken your funds out though - if you have taken a nice big wedge out does that get counted as income and catapult you over the 40% threshold so additional tax is incurred? Or is this not deemed an income? Apologies if a daft question bit its something that I always get confused on....

[eazy]

No Income tax is payable as you declare the money taken from company closure in the self assessment CGT section and pay the amount due.

[AMPM]

Originally Posted by eazy

Concession Request for ESC C16 is no longer required since the new tax year. 75% BATR has been abolished and been replaced by new CGT regime.

Now you pay CGT at 18% flat rate. However, entrepreneur's relief is available for for 1st 1Million (accummulative). This means you pay 10% CGT.

Any idea if any IT contractor has actually availed this entrepreneur's relief to pay 10% CGT? Does it apply to IT contractors?

[eazy]

The rules are for all businesses including IT. I am not in IT, but in Engineering and am in the process of closing my Ltd company using the CSC C16 concession, which I requested & obtained from HMRC in early March before the new regime kicked-in.