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  1. #11

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    I'm assuming this sum has been amassed within the current company financial year?
    Otherwise you'll already have incurred Corporation tax on the retained profit at year end.

  2. #12

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    Quote Originally Posted by baj84 View Post
    What would be the most tax efficient way to get this money (around 150k) out of the company?
    Shut down the company, claiming ER, with no intention of restarting the same kind of company.
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  3. #13
    eek
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    bored now

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    Quote Originally Posted by eek View Post
    When the time comes go permie for a bit and close the company using entrepreneurs relief to extract it paying just 10% tax
    Quote Originally Posted by TheFaQQer View Post
    Shut down the company, claiming ER, with no intention of restarting the same kind of company.
    so WIS without the all important bit to make HMRC happy. The permie job gives you an excuse to close the company down without the issue of phoenix companies.

    Then wait 3 months beyond the distribution of funds and go back contracting...
    merely at clientco for the entertainment

  4. #14
    sal
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    Quote Originally Posted by RSoles View Post
    I'm assuming this sum has been amassed within the current company financial year?
    Otherwise you'll already have incurred Corporation tax on the retained profit at year end.
    This is not a factor as the dividends are coming from the post CT profit.

  5. #15

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    Thinking out of the box here...

    1. Take the 150k out as a director's loan.
    2. Pay interest back to your Ltd to avoid P11D BIK. Current HMRC specified rate is 3%.
    3. Buy house.
    4. Wait until house prices shoot up (tongue in cheek).
    5. Take out 150k equity from house, given that is has risen in value
    6. Use equity to repay 150k loan before the January following the year in which you took the loan.

    Of course, you can supplement the 150k loan repayment with a paper transaction dividend.

  6. #16

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    I don't have a spouse and no family in the UK.

    Is it legal to shut down the company and claim ER relief?

    If I have to pay tax on the dividend amount over the low-tax threshold, is it really worth me even having a LTD company? It seems like it may be just as tax efficient to go though an umbrella company since my whole purpose is to eventually withdrawal all my company funds.

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    Quote Originally Posted by baj84 View Post
    I don't have a spouse and no family in the UK.

    Is it legal to shut down the company and claim ER relief?

    If I have to pay tax on the dividend amount over the low-tax threshold, is it really worth me even having a LTD company? It seems like it may be just as tax efficient to go though an umbrella company since my whole purpose is to eventually withdrawal all my company funds.
    Depends if you want to spend the NIC overheads that you would be liable for with an umbrella. Going with a Ltd and eventually (after three years' minimum) closing it and taking ER is the optimum strategy

    But at the end of the day, what YourCo earns is YourCo's issue. If you want personal spending money by taking it from YourCo's amassed profits, you have to pay tax on it or go to jail.
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  8. #18

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    Any machinations that involve giving money/shares to your relatives is likely to be deemed "income shifting" or "divestment of assets" by HMRC. They are not daft.

    Schemes that involve a company wind-up are not legally hygenic IMHO, might make it difficult for you have a company ever again, and will put you firmly on HMRC's radar as a person of interest for years to come.

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    Most of the options have been mentioned.

    1. Close the company and take ER, you pay tax at 10%. Become a permanent employee somewhere or contract under an umbrella. IMO, you would need to be a permie for a couple years to convince HMRC you didn't intend to go right back to contracting. If you go umbrella, IMO you'd better do it three years. So you have the extra NI and income tax you'd pay with the umbrella to offset the tax savings from ER. It probably costs more than you save compared to #3 below.

    2. Take a director's loan and pay the company 3%, no tax ramifications but you have to figure out how to pay off the loan eventually. If you can live on less than the higher rate threshold, you can still pay dividends up to the threshold and then pay whatever you don't need right back to reduce your director's loan.

    3. Take a very big dividend and pay higher rate tax. You still don't have the NI (employer's AND employee's), so this is clearly better than taking a salary.

    If you can live on 30K a year, #2 is probably best. It costs you 3% a year, but that is money paid to your company, so you'll get it back eventually. And you can cut into the loan by more than 10K a year without incurring any tax liability. If you'll need 40K a year to live with your new mortgage and the costs of maintaining your house, etc, you'll probably be best just biting the bullet, taking a large dividend, and making a "contribution to society" in the form of higher rate tax. If it helps, you can also feel a moral superiority when you make the tax payment. We'll all know you only did it because you had to, but since we don't know who you are anyway, it's all good.

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