Optimise for 19% corporation tax

[jolly fellopian]

Hi,

I haven't used my ltd company since Jan 2022, and no longer have plans to. I must close it down by Jan 2025 otherwise I can't get Business Asset Disposal Relief (Entrepreneur's Relief). I only discovered this BADR info last week.

Long story short, I expect to receive a final £100k of profit before I close and can choose when that profit is received. Company's financial year ends 31st June. Ideally I'd like to split the profit so it's two chunks of £50k so only pay 19% corporation tax. But although I can make it span two company financial years, I've no choice now but for it to arise in 2024/25's tax year. My question: when does the "first £50k @ 19%" get reset? Is it at the end of the tax year (5th April) or company financial year (31st June)? If the former, then I'm stumped, and must pay full-whack corp tax (I'm aware I'll still get some Marginal Relief).

Many thanks.

[jamesbrown]

It makes absolutely no difference when you receive the money for services delivered when accounting on the accruals basis. What matters is when the services were delivered. If the delivery spans two tax years, then you need to apportion it.

[Schnurdle]

Sounds like it may be a Close investment holding company rather than a trading company, in which case the main 25% rate will be payable regardless.
Perhaps topping up a pension may reduce the CT, but I suggest you speak to an expert.

[jamesbrown]

Sounds like it may be a Close investment holding company rather than a trading company, in which case the main 25% rate will be payable regardless.
Perhaps topping up a pension may reduce the CT, but I suggest you speak to an expert.

Yes, good point, if this is profit from investments and the timing relates to the choice of when to sell/crystalize, then it's probably a CIHC anyway, in which case the main rate of CT applies and, crucially, *no BADR*.