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    Default Taking large amounts of cash from LTD company

    Hi,

    I have a LTD company where I do the usual thing of paying myself a salary and taking dividends.

    I'm starting to get a small stockpile of cash and in a year or two, I'd ideally like to buy a house. What would be the most tax efficient way to get this money (around 150k) out of the company?

    Cheers, Ben

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    Pay yourself dividends and then pay the necessary tax on the dividends. Paying half this year and half next year would incur less tax than paying the whole lot in one year, because you would get the benefit of tax allowances from both years.

    However, with an amount as large as 150k there will be a lot of tax either way. Pay it and don't listen to anyone offering you an illegal scheme.

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    Do you have any relatives you trust, could you make them shareholders and use them to pay out dividends, your spouse would be the first point of call, any children over 16?
    “Live a good life. If there are gods and they are just, then they will not care how devout you have been, but will welcome you based on the virtues you have lived by. If there are gods, but unjust, then you should not want to worship them. If there are no gods, then you will be gone, but will have lived a noble life that will live on in the memories of your loved ones.”

    ― Marcus Aurelius

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    Quote Originally Posted by SimonMac View Post
    Do you have any relatives you trust, could you make them shareholders and use them to pay out dividends, your spouse would be the first point of call, any children over 16?
    Isn't that income shifting?

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    Quote Originally Posted by stek View Post
    Isn't that income shifting?
    I thought if the class of shares were the same for each parties, same voting rights, same dividend rights it was allowed?

    Thus, as long as a spouse (or civil partner) is given ordinary shares (carrying the normal full range of rights), any dividends paid on the shares should be treated as their income and the settlements legislation would not apply.

    Many advisers prudently recommend that dividends paid to a spouse should be paid into their own separate bank account (as opposed to the couple’s joint account).
    http://www.taxation.co.uk/taxation/A.../324521/me-you
    “Live a good life. If there are gods and they are just, then they will not care how devout you have been, but will welcome you based on the virtues you have lived by. If there are gods, but unjust, then you should not want to worship them. If there are no gods, then you will be gone, but will have lived a noble life that will live on in the memories of your loved ones.”

    ― Marcus Aurelius

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    Quote Originally Posted by SimonMac View Post
    I thought if the class of shares were the same for each parties, same voting rights, same dividend rights it was allowed?
    Hope it is, whilst I've tuliploads in the company account, I am personally potless!

    And four kids over 18, I'm watching this one!

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    Quote Originally Posted by baj84 View Post
    Hi,

    I have a LTD company where I do the usual thing of paying myself a salary and taking dividends.

    I'm starting to get a small stockpile of cash and in a year or two, I'd ideally like to buy a house. What would be the most tax efficient way to get this money (around 150k) out of the company?

    Cheers, Ben
    This is why I never advocate leaving shedloads of money in your company. You should take out the tax efficient maximum every year, leaving enough in to cover tax payments and regular bills.
    I couldn't give two fornicators! Yes, really!

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    Quote Originally Posted by baj84 View Post
    Hi,

    I have a LTD company where I do the usual thing of paying myself a salary and taking dividends.

    I'm starting to get a small stockpile of cash and in a year or two, I'd ideally like to buy a house. What would be the most tax efficient way to get this money (around 150k) out of the company?

    Cheers, Ben
    When the time comes go permie for a bit and close the company using entrepreneurs relief to extract it paying just 10% tax
    merely at clientco for the entertainment

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    Quote Originally Posted by unixman View Post
    Pay yourself dividends and then pay the necessary tax on the dividends. Paying half this year and half next year would incur less tax than paying the whole lot in one year, because you would get the benefit of tax allowances from both years.

    However, with an amount as large as 150k there will be a lot of tax either way. Pay it and don't listen to anyone offering you an illegal scheme.
    Pah. 150k. Thought this was about proper money. I'll pass.
    What happens in General, stays in General.
    You know what they say about assumptions!

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    Quote Originally Posted by SimonMac View Post
    I thought if the class of shares were the same for each parties, same voting rights, same dividend rights it was allowed?



    http://www.taxation.co.uk/taxation/A.../324521/me-you
    This is true, to a degree.

    Having your spouse as a share holder is fine. Arctic Systems sorted that out. Having your (older) kids as shareholders I don't think has ever been tested when they are not actively involved in the company in the way most family owned firms are.

    Beyond that I think HMRC will definitely want to talk to you about it if 3 or four more relatives suddenly become shareholders the week before a large divi is declared. Especially if tat cash then ends up back with you. That, to me, is moving from something reasonable to an artificial arrangement for the specific purpose of avoiding tax. And we all know what they think about those.

    It also raises the question about how you managed it for the next divi where you don't want to have to give them the money. How do you manage that without it getting very messy?

    IANAA, IANATL, IMNKWIATA. YHBW.
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