Hi Miriam,
You'll find plenty of info about the benefits of an MVL on the MVL Online homepage. As Cirrus suggested, there may be other options like hefty pension contributions which potentially could be more suitable for your personal circumstances (eg if you don't need the cash now and the company had made big profits very recently so CT relief on huge contributions would be available), but really you'd need to discuss these kinds of things with your accountant.
- Visitors can check out the Forum FAQ by clicking this link. You have to register before you can post: click the REGISTER link above to proceed. To start viewing messages, select the forum that you want to visit from the selection below. View our Forum Privacy Policy.
- Want to receive the latest contracting news and advice straight to your inbox? Sign up to the ContractorUK newsletter here. Every sign up will also be entered into a draw to WIN £100 Amazon vouchers!
Collapse
You are not logged in or you do not have permission to access this page. This could be due to one of several reasons:
- You are not logged in. If you are already registered, fill in the form below to log in, or follow the "Sign Up" link to register a new account.
- You may not have sufficient privileges to access this page. Are you trying to edit someone else's post, access administrative features or some other privileged system?
- If you are trying to post, the administrator may have disabled your account, or it may be awaiting activation.
Logging in...
Previously on "Closing my company and drawing out the retained profits (and capital)"
Collapse
-
Originally posted by Patrick@Intouch View PostIf the company has more than £25,000 in net shareholders funds then a formal liquidation must take place.
Any distribution can be treated as a capital distribution so long as your husband does not continue in "the same or a similar trade or activity" during the two years following the liquidation of the company.
The definition of "same or similar..." has been left open in the legislation but HMRC's guidance currently states that they will not include permanent employment in that definition. That is not to say that they never will as they can change their guidance and the risk of any claim for entrepreneur's relief on the capital gain declared being overturned by HMRC should be considered.
Should your husband declare any distribution as capital gains and successfully apply entrepreneur's relief then he would pay tax at 10% on any gain made in excess of the annual exemption (currently £11,300).
Should the claim for entrepreneur's relief be overturned then any distribution may be viewed as dividend income and taxed accordingly.
Martin
Contratax Ltd
Leave a comment:
-
Originally posted by TheCyclingProgrammer View PostNot necessarily, it depends on what the new company's trade/activity is.
Leave a comment:
-
Originally posted by MiriamValentine View Posthow much we might be able to draw out?
When you are ready, you can draw it down, with the first 25% tax free.
Leave a comment:
-
Originally posted by Invisiblehand View PostThis option will however mean he cannot set up a new Limited Company for two years.
Leave a comment:
-
If the company has more than £25,000 in net shareholders funds then a formal liquidation must take place.
Any distribution can be treated as a capital distribution so long as your husband does not continue in "the same or a similar trade or activity" during the two years following the liquidation of the company.
The definition of "same or similar..." has been left open in the legislation but HMRC's guidance currently states that they will not include permanent employment in that definition. That is not to say that they never will as they can change their guidance and the risk of any claim for entrepreneur's relief on the capital gain declared being overturned by HMRC should be considered.
Should your husband declare any distribution as capital gains and successfully apply entrepreneur's relief then he would pay tax at 10% on any gain made in excess of the annual exemption (currently £11,300).
Should the claim for entrepreneur's relief be overturned then any distribution may be viewed as dividend income and taxed accordingly.
Leave a comment:
-
Liquidation is definitely an option to take advantage of entrepenuers relief. This option will however mean he cannot set up a new Limited Company for two years. If he's happy as a permie this is no doubt your best option financially speaking.
A regular poster on this forum owns a company called MVLonline. They seem to come recommended and would definitely be a good starting point.
Leave a comment:
-
Closing my company and drawing out the retained profits (and capital)
Hello there!
I trust this is the right place to ask my question.
My husband used to go contracting but he hasn't this past year and we want to close his company, a sole directorship. We have a substantial amount of retained earnings and were wondering what the best way to draw it out was. As we want to liquidate the company I've been looking at both options of striking of the company and members' voluntary liquidation. I understand that this information is online, but I've simply not been able to get my head around it.
Please could somebody help? Any help is appreciated.
I'm trying to understand what the taxes are that we must pay and how much we might be able to draw out?
Thanks very much!Tags: None
- Home
- News & Features
- First Timers
- IR35 / S660 / BN66
- Employee Benefit Trusts
- Agency Workers Regulations
- MSC Legislation
- Limited Companies
- Dividends
- Umbrella Company
- VAT / Flat Rate VAT
- Job News & Guides
- Money News & Guides
- Guide to Contracts
- Successful Contracting
- Contracting Overseas
- Contractor Calculators
- MVL
- Contractor Expenses
Advertisers
Contractor Services
CUK News
- Streamline Your Retirement with iSIPP: A Solution for Contractor Pensions Sep 1 09:13
- Making the most of pension lump sums: overview for contractors Sep 1 08:36
- Umbrella company tribunal cases are opening up; are your wages subject to unlawful deductions, too? Aug 31 08:38
- Contractors, relabelling 'labour' as 'services' to appear 'fully contracted out' won't dupe IR35 inspectors Aug 31 08:30
- How often does HMRC check tax returns? Aug 30 08:27
- Work-life balance as an IT contractor: 5 top tips from a tech recruiter Aug 30 08:20
- Autumn Statement 2023 tipped to prioritise mental health, in a boost for UK workplaces Aug 29 08:33
- Final reminder for contractors to respond to the umbrella consultation (closing today) Aug 29 08:09
- Top 5 most in demand cyber security contract roles Aug 25 08:38
- Changes to the right to request flexible working are incoming, but how will contractors be affected? Aug 24 08:25
Leave a comment: