3 weeks left as contractor - can I MVL now?

[Maslins]

What about making large pension contributions as salary sacrifice?
Taking low PAYE income and still extracting dividends? Is that possible?

I guess, yeah. Would be surprised if that was viable for more than a tiny minority though.

[wicko27]

If they've retired, or taking a year or two away from work for some reason (eg full time parent), ie something which means they have negligible other income, then yes, dividends over a few years could make more sense.

Thanks for this - think I will end up having about 30k in the business and was just going to do a MVL. I might actually think about just taking dividends now as the year progresses... might take the edge off getting an underpaid permie job if I have to later in the year (I'm taking a few months off).

[CompoundOverload]

Thanks for this - think I will end up having about 30k in the business and was just going to do a MVL. I might actually think about just taking dividends now as the year progresses... might take the edge off getting an underpaid permie job if I have to later in the year (I'm taking a few months off).

Take dividends post April? Then you need to factor in any PAYE salary you receive because the income you earn PAYE pushes up your dividend tax to 32.5%, assuming you earn an OK salary.

[WordIsBond]

For that amount? Take extra dividends, or make extra pension contributions, before 5 April, to get under £27K. On 6 April, take a £2K div to take advantage of the dividend allowance, which gets you under £25K. Get final accounts filed, and strike the company off. You'll have a £25K capital gain.

If you have a spouse that is an equal shareholder, use £29K, because you'll both get £2K on 6 April. Your 25K capital gain will be taxed at almost nil in this case because each of you gets the cap gains allowance of £12K.

If you don't have a spouse shareholder, you'll have to pay CGT on £13K, unfortunately. I don't think there is any way to split the CG over two years on a striking off.

[gr4z]

Thanks for the advice chaps. I agree its not worth rushing into anything with everyone jumping ship with IR35 and in the interests of time before the end of the FY, I will wait until FY20-21 before any MVL.

I will have to take a dividend before the end of the FY, however, as I am starting my FTE in March, I assume any salary earnt in March will also count towards my total year salary and by SA will be affected. Could be tricky I guess.
I think it prudent to maximise my pension contributions before the end of the FY and then again next year as I have a buffer before the maximum contributions before any MVL.
I do have quite a large cash asset after 10 years contracting in my company, if I liquidate and ER still exists, do I get stung with any extra tax above and beyond ER/CGT?

Thanks again

[katdan]

I guess, yeah. Would be surprised if that was viable for more than a tiny minority though.

Hello,

Hope everyone is keeping well.

My hubby and I own a LTD company (50/50 shares). I'm unemployed since Jan 2020, and currently looking for a perm role. My husband is working as a PAYE contractor via umbrella company since Apr 2020. We're thinking to close down the LTD.

I came across a few discussions on forum that LTD (employer) can contribute one lump sum to employee's pension (using the LTD's reserved fund) to reduce CT and CGT. We'll likely go down MVL route to close the LTD but will like to find out if using pension contribution will help to reduce amount of tax we have to pay, and potentially, we can go down to striking off the LTD option.

P/S: I do already have an employer pension scheme set up but only contribute £100 per month for the last 8 years.

Any thoughts?

Thanks in advance.

[northernladuk]

Your accountant will advise the most tax efficient methods to extract your money. It's part of what you pay them for.