What happens to my company if I go permie?

[LouC]

Hi all

Been a contractor about 5 years, but the lack of contracts out there is making me consider permie positions.

I´ve got a limited company, with some capital in it, say 60k or there abouts after all this year´s expenses.

If I take a permie position:

1. Will I have to wind down the limited company? Or Can I keep it as a going concern with me as director?
2. If I do wind down the company, what happens to the monies in the business bank account? Do I have to take it out immediately or can I do it over time?
3. Are there any blindingly stupid questions i´m missing?

Many thanks
Lou

[lexington_spurs]

Hi all

Been a contractor about 5 years, but the lack of contracts out there is making me consider permie positions.

I´ve got a limited company, with some capital in it, say 60k or there abouts after all this year´s expenses.

If I take a permie position:

1. Will I have to wind down the limited company? Or Can I keep it as a going concern with me as director?
2. If I do wind down the company, what happens to the monies in the business bank account? Do I have to take it out immediately or can I do it over time?
3. Are there any blindingly stupid questions i´m missing?

Many thanks
Lou

1. The financial cost of getting this stuff wrong is exponentially more than a good accountant charges to get it right.
2. You can wind up your LTD and claim Entrepreneur's Relief (beneficial tax rate) on whatever's left after you've paid all your taxes (see 1.) but I think you can only do it the once.
3. You can leave the company dormant if you remember to do the necessary returns etc.
4. If ther company is actually closed down, its bankers may have an issue with running an account in its name. You can send all unwanted monies to me.

[BrilloPad]

Hi all

Been a contractor about 5 years, but the lack of contracts out there is making me consider permie positions.

I´ve got a limited company, with some capital in it, say 60k or there abouts after all this year´s expenses.

If I take a permie position:

1. Will I have to wind down the limited company? Or Can I keep it as a going concern with me as director?
2. If I do wind down the company, what happens to the monies in the business bank account? Do I have to take it out immediately or can I do it over time?
3. Are there any blindingly stupid questions i´m missing?

Many thanks
Lou

1. you can keep it going. but it costs. personally I like to burn companies after a few years anyway. It makes IR35 detection harder. You can also make a final distribution which counts towards your capital gains.
2. As long as you have paid all your tax does it matter?

[FarmerPalmer]

I'd keep the company ticking over, filing CT returns as normal, which having no income except for the investments should be cheap to do (check with your accountant on cost - they might try and bleed it off themselves), and withdraw the funds over time, as and when you need it.

If you take it all out now you'll have a personal tax liability, because you'll go over the 40% bracket for this year.

If you don't need it, get the company to invest it, and draw it at a tax beneficial time.

;o)

... unless you need the money right now

[TykeMerc]

1. Will I have to wind down the limited company? Or Can I keep it as a going concern with me as director?
2. If I do wind down the company, what happens to the monies in the business bank account? Do I have to take it out immediately or can I do it over time?
3. Are there any blindingly stupid questions i´m missing?

Many thanks
Lou

1. No. Some permie employers insist that you can't have your own company while being employed by them, but that's not all that common.
2. Tax will have to be paid if you get all the cash out, literally speaking with the company wound up the account has to be closed.
3. Probably.

[LouC]

Thanks for all that advice.

So the choices are:

1. I can keep the company going, and stay as company director, with it just not earning any money. I can do this even if I'm employed as a permie. I can keep doing that as long as I file my tax returns every year, hopefully at minmal cost. So then, if after two years for example, I take a new contract, I can carry on trading under the old company.

Seems to me this would look very bad IR35 wise...

OR

2. I can take all the money out and close the company.

Is that about the size of it...?

[Kess]

A quick follow-up question. If I take a permie role but keep my ltd company ticking over with zero income, can my company still make pension contributions in parallel with whatever pension arrangements I have with my permie employer?