Closing down a company - just checking

[Crossroads]

Taking my dividends as normal and then go whatever route is suitable.

However what happens when I need to do a personal tax return? As I've paid a basic wage up until then, a dividend payment and then an MVL distribution as I going to get absolutely hammered on my personal return?

I also assume that means I'll get 0 wage from my new job until the end of the year as I'll be paying top rate tax?

If you continue to take dividends and your new permanent wage is going to push you into higher rate tax band then you will get hammered on dividend tax. If you can survive without the money (I saw the house purchase comment) then it would be better to do so, as the 10% you will pay via CGT will be lower.

I believe you will be taxed as normal in your new job, and then any additional tax owed on dividends will be collected via self assessment.

Personally, I would stop taking any money from the company if you can, and extract it via MVL as the tax will be lower when your new salary pushes you into the 40% (or above) band.

[zappakat]

Money being used for first house.

[northernladuk]

Max out the pension first??

[zappakat]

Thanks for the replies, he's answered it although I've had to go back with further questions. I've read the MVL guides, looked through the MVL Online process but it's still a bit of a whoosh to be honest hence why the first thing I did was getting an accountant.

Apparently I'm better off closing the company down on the final day of trading and doing an end of year return then. Taking my dividends as normal and then go whatever route is suitable.

However what happens when I need to do a personal tax return? As I've paid a basic wage up until then, a dividend payment and then an MVL distribution as I going to get absolutely hammered on my personal return?

I also assume that means I'll get 0 wage from my new job until the end of the year as I'll be paying top rate tax?

[Maslins]

Hopefully your accountant has already answered, but my 2p (IANAA):

The funds distributed via an MVL are subject to CGT, not income tax, so will have no bearing on your permanent salary. The CGT due (if any once your annual CGT allowance is taken into account) will be payable via self assessment. If (like me) you are a bit of a mug for letting the tax tail wag the investment dog then now is the time to also educate yourself about VCT's, EIS and SEIS, but that is a whole different subject.

Your P45 is not related to your company being liquidated, nor your shareholding or position as an officer as the company, so this can be issued as soon as you cease to be an employee of your Ltd company.

^^WHS

Most of the low cost liquidators will insist on you leaving as an employee (ie getting a P45) before they get involved anyway, as they'll want the employer registration closed. This page of our sister company's website may prove helpful. Top half indicates things we need you/your accountant to do before we get involved. Bottom half gives you a summary of what to expect as the liquidation gets underway, including approximate timescales etc.

[Crossroads]

How does that effect my permie wage tax or the calculation whilst the MVL is being processed? Or will it be a case of paying back taxes in the next financial year? I'm expecting the MVL payout to be in 6 figures :-\

I guess my P45 won't come through until the company is liquidated either so I'll be on emergency tax anyway.

Hopefully your accountant has already answered, but my 2p (IANAA):

The funds distributed via an MVL are subject to CGT, not income tax, so will have no bearing on your permanent salary. The CGT due (if any once your annual CGT allowance is taken into account) will be payable via self assessment. If (like me) you are a bit of a mug for letting the tax tail wag the investment dog then now is the time to also educate yourself about VCT's, EIS and SEIS, but that is a whole different subject.

Your P45 is not related to your company being liquidated, nor your shareholding or position as an officer as the company, so this can be issued as soon as you cease to be an employee of your Ltd company.

[northernladuk]

I don't think anyone here is going to give you all the answers you want before you go to bed.

Speak to your accountant in the morning and get a proper answer rather than a half baked attempt this late on from here.

Also ring Chris Maslin who runs MVLOnline and get him to talk you through it end to end.

[zappakat]

So my current contract finishes in October and I've been offered a permanent post starting the same month.

If I go down the MVL route (haven't contracted for the permanent gig before) and make a final payment in 4-6 months when the process completes.

How does that effect my permie wage tax or the calculation whilst the MVL is being processed? Or will it be a case of paying back taxes in the next financial year? I'm expecting the MVL payout to be in 6 figures :-\

I guess my P45 won't come through until the company is liquidated either so I'll be on emergency tax anyway.

I've emailed the accountant, I just don't want to spend tonight thinking about it instead of sleeping.

Thanks
Z