Going perm - what to do with distributable income?

[Adlopa]

As opposed to what? Evaded?

Anyway, yes.

I meant rather than new income taken as dividends through another Ltd company (avoidance?). While there's no tax advantage to operating as a sole trader (quite the reverse), I guess there is in winding up the company rather than continuing to operate it in a much reduced fashion –*though maybe one could argue there's little point in operating a LTD with next-to-no revenue after the main stream has ceased. One to discuss with my accountant in more depth, it seems.

[jamesbrown]

I meant rather than new income taken as dividends through another Ltd company (avoidance?). While there's no tax advantage to operating as a sole trader (quite the reverse), I guess there is in winding up the company rather than continuing to operate it in a much reduced fashion –*though maybe one could argue there's little point in operating a LTD with next-to-no revenue after the main stream has ceased. One to discuss with my accountant in more depth, it seems.

I think you're confused about the TAAR, but I suggest you read it. If you're carrying on the same or a similar trade (whether via a Ltd or as a sole trader) or activity within two years of receiving a capital distribution from an MvL, that capital distribution is liable to being reclassified as a dividend distribution. To prevent this, you need to retire, veritably change the trade (e.g. if you're currently in IT, that probably means doing something outside of IT altogether) or become an employee of some company that is not run by a connected person, which might include becoming an employee of an umbrella company (debatable). In short, the TAAR is very widely drawn, so forget about trying to circumvent it.

[Adlopa]

within two years of receiving a capital distribution from an MvL, that capital distribution is liable to being reclassified as a dividend distribution.

Ah, I get it now. Thanks for illuminating that point.