Hi Guys,
Pl could anyone suggest the most tax efficient way to withdraw 270k of accumulated profit from limited company after contracting for more than a decade.
There are few posts I have read and as tax rules (and HMRC strictness) have changed quite a lot in last 2 years, looking for some updated ideas.
As per my limited knowledge, these are the 2 options I can think of but happy to get some valid ideas.
I am contracting at the moment and not sure if I'll join permi or continue contracting in coming few months. However I'd be changing technology for sure so won't continue doing contracting in the same field / technology which I have been doing for years.
PS: I am not looking to cheat or evade tax but to find most tax efficient manner to withdraw sum as any business would do.
1) Take less than 100K as dividend and salary every year and pay 32.5% tax on dividend over 43K.
- Cons - It will take 6-8 years to withdraw whole sum given that I'd be working alongside which will generate more income
2) Voluntarily liquidate company and take whole sum as capital gain and pay legitimate tax 28% if ER is rejected or 10% in case of ER (if I join as permi)
- Pros - All sum will be in pocket with less than 32.5% tax in any which case.
- Not sure though if I can close the company if I will start doing contracting immediately or after a break but in different technology.
Can't think of any other idea.
Appreciate your views.
Thanks
Sam
Pl could anyone suggest the most tax efficient way to withdraw 270k of accumulated profit from limited company after contracting for more than a decade.
There are few posts I have read and as tax rules (and HMRC strictness) have changed quite a lot in last 2 years, looking for some updated ideas.
As per my limited knowledge, these are the 2 options I can think of but happy to get some valid ideas.
I am contracting at the moment and not sure if I'll join permi or continue contracting in coming few months. However I'd be changing technology for sure so won't continue doing contracting in the same field / technology which I have been doing for years.
PS: I am not looking to cheat or evade tax but to find most tax efficient manner to withdraw sum as any business would do.
1) Take less than 100K as dividend and salary every year and pay 32.5% tax on dividend over 43K.
- Cons - It will take 6-8 years to withdraw whole sum given that I'd be working alongside which will generate more income
2) Voluntarily liquidate company and take whole sum as capital gain and pay legitimate tax 28% if ER is rejected or 10% in case of ER (if I join as permi)
- Pros - All sum will be in pocket with less than 32.5% tax in any which case.
- Not sure though if I can close the company if I will start doing contracting immediately or after a break but in different technology.
Can't think of any other idea.
Appreciate your views.
Thanks
Sam
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