Closing Company

[Dan@OrangeGenie]

We have a £1,500 MVL solution, happy to recommend you?

[Miguelito]

Thanks all!

[Maslins]

As you don't want to go down the pension route, and also want funds sooner rather than later (ie making the "drip feed £5k dividends/year over ~8 years" option unappealing) then does sound like an MVL is your best option if tax minimisation is important.

Otherwise you could just take a £40k dividend now avoiding an MVL...but from an overall cost perspective whilst you'd be saving £2k on liquidation costs, you'd likely suffer ~£13k in tax on that dividend (assuming all in 32.5% higher rate band and no other quirks), compared to ~£3k in tax via an MVL if you benefit from your annual exemption and entrepreneurs relief. So overall loss of money = ~£13k to big divi vs ~£5k to MVL.

[Miguelito]

Thanks for the response Darren

Yes, the new salary and package will put me in to the higher rate bracket.

Cheers

Miguel

[Darren at Fox-Bartfield]

MVL

On the face of it, looks like an MVL situation. Will your new salary plus other earnings for the current tax year take you into higher rate?

If so, suggest giving MVL Online or SFP who we also use.

Oh.....and have you asked your accountant before NLUK chirps up.

[Miguelito]

Hi all

I was hoping you'd be able to validate my thoughts and provide some advice on next steps.

I set up my own limited company 20 months ago and have been working solely with one client during this time, its been a great engagement and before christmas they offered me a perm director role which I have accepted.

I started the role last week and I'm now beginning to think about the best approach to close my company down.

Both tax years I've paid myself the maximum dividend allowance up to the high rate threshold, and am left with £40K in the company account having taken in to account all remaining liabilities - VAT, HMRC etc.

Given the relatively low amount is the best approach still an MVL combined with Enterpreneurs Relief?

My other consideration was taking a remaining dividend in the next tax year to take the remaining funds below the £25K limit, however on the face of things this still works out a more costly approach given I'll be a higher rate tax payer.

For clarity I'm looking to use any funds received upon closure of the company toward a new house, therefore distributing to a pension isn't something I'm looking to do.

Any thoughts greatly appreciated.