Early retirement and closing down company

[Craig@Clarity]

Oh and btw, congratulations on being in a position to retire early

[WordIsBond]

I don’t think it’s that complicated. If there’s nothing to gain from taking a salary versus a dividend (about which there is no question), then why take a salary? Rhetorical question.

1) Keep the company open and draw down at £15k/year for the next 9 years or so. This is tax-free, but will mean ongoing fees to the accountant, which I estimate would be close to £10k over 9 years (and with no revenue to set it against) - so not a ‘free’ option. But it would mean I’d have 9 more qualifying years for state pension which I’ve not yet filled up

emphasis added

Dividends don't qualify you for state pension. Salary of around £6K does.

Class 3 voluntary contributions over the next 9 years would probably cost around £7K, so he's saving that if he takes the above route but has to pay accountancy fees. He should be able to find someone to do the accountancy for him in this scenario for a lot less, but still, it eats into anything he might save on Class 3 NI. I don't think the savings is worth it but there IS something to gain, in his case, from taking a salary, and he could probably get away with it for a few years. 9 years might be a bit much.

[jamesbrown]

emphasis added

Dividends don't qualify you for state pension. Salary of around £6K does.

Class 3 voluntary contributions over the next 9 years would probably cost around £7K, so he's saving that if he takes the above route but has to pay accountancy fees. He should be able to find someone to do the accountancy for him in this scenario for a lot less, but still, it eats into anything he might save on Class 3 NI. I don't think the savings is worth it but there IS something to gain, in his case, from taking a salary, and he could probably get away with it for a few years. 9 years might be a bit much.

That's precisely what I meant by "rhetorical question", because we both know the reality that there *is* an advantage from taking a salary.

It may all be pretty inconsequential, but it's also hard to argue that you're not trying to fit a square peg into a round hole. Like I said at the beginning, if it looks and quacks like a duck, it's probably a duck. No amount of trivial admin and paying an accountant to submit RTIs and prepare annual accounts amounts to an ongoing trade, so just take the dividend distributions, which is what they are.

[WordIsBond]

That's precisely what I meant by "rhetorical question", because we both know the reality that there *is* an advantage from taking a salary.

It may all be pretty inconsequential, but it's also hard to argue that you're not trying to fit a square peg into a round hole. Like I said at the beginning, if it looks and quacks like a duck, it's probably a duck. No amount of trivial admin and paying an accountant to submit RTIs and prepare annual accounts amounts to an ongoing trade, so just take the dividend distributions, which is what they are.

Well, I don't disagree with the advice, just the way you get there. But I'd probably just do MVL/ER instead and have it done.

[jamesbrown]

Well, I don't disagree with the advice, just the way you get there. But I'd probably just do MVL/ER instead and have it done.

Right, or do the MVL if you don’t want to dripfeed. That’s what I’d do in any case, especially if coming back within 5 years.