MVL - help please

[luxCon]

To do this, presumably YourCo still needs to keep paying you a salary? I seem to recall when I was looking at the prospect of doing something similar, my accountant said it might be viewed dimly by HMRC to be paying pension contributions with no accompanying salary.

You don't need to pay salary, in fact you cease your PAYE. You still be director and need an accountant to produce reduced set of filings. It would be a cheaper accounting fees. You keep the company going without any trading. Once trading starts you back to normal.

I've never done it, but know its the recommended way if you know you will need the company.

Ref Pension contributions; It only makes sense during trading periods where there is corp tax liabilities. So if for next tax year you cease trading, there will be no benefits in paying pension contributions. But you can pay Divs, at least the 2k

Talk to accountant for details

[Snooky]

If you have over 80k emaining and want to retain the ability to contract, then I would say explore keeping the company as dormant with reduced costs, and draw smaller divis per annum and make SIPP contributions with view reducing Corp Tax.

To do this, presumably YourCo still needs to keep paying you a salary? I seem to recall when I was looking at the prospect of doing something similar, my accountant said it might be viewed dimly by HMRC to be paying pension contributions with no accompanying salary.

[CompoundOverload]

If you have over 80k emaining and want to retain the ability to contract, then I would say explore keeping the company as dormant with reduced costs, and draw smaller divis per annum and make SIPP contributions with view reducing Corp Tax.

Dividend tax on 50k plus personal income is 32.5% so on top of your perm salary you will pay 32.5% on every pound barring first 2K

Thanks, my plan was to try and do it expedited before new tax year (probably wishful thinking now), as it's a quicker process when not down the MVL route.

[luxCon]

Whilst we're on the subject on MVLs.

If one has >80k profit in their business and wants to close down the company but does not want to close the door on contracting completely (in case other outside gigs manifest themselves later on in the future), would the best course of action be to just take divs out and pay the higher rate, safe in the knowledge that if a gig does turn my head, I could start a new company up and crack on?

Bit of background, current contract come to a close as nothing on the radar currently, so I've taken a perm role till the contract market settles itself.

Worth noting, not overly fussed about paying higher rate threshold to extract money out now which will help pay for some house works.

Any opinions welcome.

TIA.

If you have over 80k emaining and want to retain the ability to contract, then I would say explore keeping the company as dormant with reduced costs, and draw smaller divis per annum and make SIPP contributions with view reducing Corp Tax.

Dividend tax on 50k plus personal income is 32.5% so on top of your perm salary you will pay 32.5% on every pound barring first 2K

[Lance]

Whilst we're on the subject on MVLs.

If one has >80k profit in their business and wants to close down the company but does not want to close the door on contracting completely (in case other outside gigs manifest themselves later on in the future), would the best course of action be to just take divs out and pay the higher rate, safe in the knowledge that if a gig does turn my head, I could start a new company up and crack on?

Bit of background, current contract come to a close as nothing on the radar currently, so I've taken a perm role till the contract market settles itself.

Worth noting, not overly fussed about paying higher rate threshold to extract money out now which will help pay for some house works.

Any opinions welcome.

TIA.

Yes.

HTH

[CompoundOverload]

Whilst we're on the subject on MVLs.

If one has >80k profit in their business and wants to close down the company but does not want to close the door on contracting completely (in case other outside gigs manifest themselves later on in the future), would the best course of action be to just take divs out and pay the higher rate, safe in the knowledge that if a gig does turn my head, I could start a new company up and crack on?

Bit of background, current contract come to a close as nothing on the radar currently, so I've taken a perm role till the contract market settles itself.

Worth noting, not overly fussed about paying higher rate threshold to extract money out now which will help pay for some house works.

Any opinions welcome.

TIA.

[Maslins]

For the Qs in your OP:
1) presumably you're a director? If so, you'd tend to remain one even if you leave the payroll.
2) yes.
3) potentially yes, but the liquidator wouldn't get involved until after that was done. Ie you can't appoint a liquidator, then pay a dividend.

[Lance]

with 40 to 45 cash left MVL may NOT be your best option.

Maybe the best is to take dividend to reduce cash to 25k and then do a Capital Distribution which will be cheaper. Cant help you further , talk to your accountant

As a point of note, an MVL uses a capital distribution to get the money out. That's how you can claim BADR. BADR is a relief on CGT.
You mean reduce the capital to below £25k and then do a strike off.
Interestingly a strike-off is not impacted by TAAR rules. Striking off a company - RossMartin.co.uk

Details are important.

[luxCon]

with 40 to 45 cash left MVL may NOT be your best option.

Maybe the best is to take dividend to reduce cash to 25k and then do a Capital Distribution which will be cheaper. Cant help you further , talk to your accountant

[northernladuk]

Use the google search method and search for MVL. We've got literally 100's of threads on all aspects of it. In google type the following.

MVL site:contractoruk.com/forums

Mess with the keywords to get more specific results.

Also give Chris Maslin a call at MVL Online. He gives a lot of advice here and has done MVL's for a number of members on here.

[yonyonson]

I've done a bit of research on this, but thought this would be a good place to get some answers to a few queries on my mind.

I switched to an umbrella at the start of this year (due to IR35) so thinking of closing down my ltd company as I don't foresee any future use of it for the next few years.

After I file and pay my liabilities this year (Corporation Tax), I think I will have about 40-45k in cash / retained profits. I've heard the most effective way is to do a MVL and entrepreneur relief. A few questions:

1. I read that you have to be an employee of the ltd company to claim ER (I also own 100% of capital and voting rights in the ltd company). I've been paying myself via PAYE and dividends prior to switching to umbrella. I've recently filed an EPS for the months I didn't pay myself and when I called HMRC they advised that I submit a p45 for myself and submit a final submissions for this tax year (after 31st March 2021) so I won't have to continue to file. Does this still make me an employee even though I took myself off payroll with the p45, or do I need to add myself back on?

2. With regards the ER, I hear the tax take is 10%. Do you pay this tax bill via self assessment in the same way that you pay tax on dividends?

3. Dividend tax is tax free up to £2k. Am I allowed to pay myself that once the FY 21/22 kicks in, and then proceed with the MVL and entrepreneur relief? (as I've heard that the MVL can take up to 7-9 months?)

Thanks in advance