Originally posted by ITandArty
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You'd pay her a salary of £8.6K (tax free, and protects against Corp Tax on any small amount she makes on her art). You'd then pay divs up to the higher rate threshold with tax at 7.5% after the first 8K of the divs (in other words, after personal allowance and divs allowance). So, a little over £2K in taxes each year while you wind the funds down. If she ends up making a little money with her art, that's cool, it takes a little longer to wind the funds down. You also pay an accountant each year to process the accounts, etc. You'd presumably deregister from VAT since you'll have very low revenue and that way she doesn't have to charge it on what she sells.
The other probable alternative is to close the company (MVL) and claim Entrepreneur's Relief. That would mean you pay 10% tax on the distributions from the company. You get all the money right away. You don't have to pay accountants anymore, though you do have to pay someone to handle the MVL for you. This does have the added benefit of pretty much closing off any historical IR35 problems once the company is closed. You won't be able to close it if HMRC have started an IR35 (or other) investigation of you, but if they haven't, you can probably close it and not worry too much anymore.
The best decision partly depends on multiple factors, such as whether there's benefit in getting all the money out quickly, how concerned you may or may not be about historical IR35 investigations, whether you want the hassle of continuing to have to deal with accountants, whether Mrs hopes to make this art thing into a bigger deal or whether it is always likely to just be a small hobby that hopefully makes a few extra quid, etc, etc.
The financial differences between the two options are probably not all that large, so other factors related to your life and personalities and goals and current financial situation are probably more important in making the decision.
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