Tax efficient way to withdraw 270k accumulated profit from ltd company

[jamesbrown]

A quick question though (or may be for separate post if it is too big for a discussion), I have 70K director's loan taken from company from last few years and paying legitimate interest rate to company to avoid P11D benefit. Do I need to clear this DL prior to MVL or can this be adjusted from CG payment via accounting books?
Only difference here is if it has to be paid via dividends, then I'll end up paying 32.5% whereas if it can be adjusted from CG somehow, it would attract at the most 20% tax.

Yes, you'll need to settle the DLA, I think, but you'll need to speak to your accountant and MvL provider on these details. For example, the DLA could be a problem insofar as you've presumably (or should have) paid the S.455 charge, which is refunded in the year following the DLA being settled, so there's quite a long wait, potentially, until the DLA is resolved.

[ChimpMaster]

A quick question though (or may be for separate post if it is too big for a discussion), I have 70K director's loan taken from company from last few years and paying legitimate interest rate to company to avoid P11D benefit. Do I need to clear this DL prior to MVL or can this be adjusted from CG payment via accounting books?
Only difference here is if it has to be paid via dividends, then I'll end up paying 32.5% whereas if it can be adjusted from CG somehow, it would attract at the most 20% tax.

Yes, you'll need to settle the DLA, I think, but you'll need to speak to your accountant and MvL provider on these details. For example, the DLA could be a problem insofar as you've presumably (or should have) paid the S.455 charge, which is refunded in the year following the DLA being settled, so there's quite a long wait, potentially, until the DLA is resolved.

Looks like S455 will apply if you've had the loan for that long. This should have been picked up by your accountant already else it could get a little messy.

Apart from S455, if you MVL then you can usually clear the loan through a 'paper transaction' distribution, though of course this distribution is subject to the prevailing CG tax rate.

[Patrick@Intouch]

Aside from all of the really good and valid points already made it should be pointed out that going permie may allow you to claim the distribution as a capital gain and apply entrepreneur's relief as HMRC's guidance states that employment is not included in "same or similar trade or activity".

This is only the guidance however and the legislation (as above) is sufficiently woolly as to allow HMRC to change to guidance to include employment should they wish to do so.

[Waldorf]

Remember that there is a General Election in progress, tax rules could change in the next few months so you will need to decide soon. There's a chance any new tax rules could be more favourable although I would doubt this.