BADR and outside IR35 query

[Maslins]

If not finalised pre 6th April does that mean I'll be be on 14% charge or start of the process determines what will get charged?

Each distribution is a separate event for CGT. So for example if you have £200k final net assets, and they distributed £180k pre 5 April 2025, the balancing £20k post 6 April 2025, you'd have a gain in each tax year. Both likely would (subject to normal criteria) qualify for BADR, so first one probably suffering 10%, second one suffering 14%. Hence why in that situation it may be a big deal to get the liquidator appointed and first distribution pre 5 April 2025. Not so important if the final distribution is later.

[css_jay99]

Realistically they'll unlikely be in a position to finalise the liquidation until post 6 April 2025, and most will want to retain some asset value as security until they can finalise.

...but yeah, there's no reversing a liquidation. So if you appoint a liquidator, then get offered an amazing outside IR35 position, your options will be limited.

If not finalised pre 6th April does that mean I'll be be on 14% charge or start of the process determines what will get charged?

[Maslins]

If you're broadly ready to go (have stopped trading, and accounting things up to date) you've comfortably got time to appoint a liquidator and get first distribution this side of 5 April 2025, which is typically the lion's share of the company's funds. Realistically they'll unlikely be in a position to finalise the liquidation until post 6 April 2025, and most will want to retain some asset value as security until they can finalise.

...but yeah, there's no reversing a liquidation. So if you appoint a liquidator, then get offered an amazing outside IR35 position, your options will be limited.

[jamesbrown]

Thanks, I’ll check with him.

Instead of going through an umbrella in such circumstances, Will another ltd company suffice whereby I am paid via PAYE and maxing out pension contributions?. I think the mrs ltd is still operating even though stopped contracting for some time now

AIUI, you're at risk if you get involved with any other company of which you own 5% or more of the share capital and receive payments from that company because the TAAR is very broadly drawn. In summary, I wouldn't bother - it really makes no sense to operate through a Ltd with an inside IR35 contract, none at all. Umbrella and salary sacrifice.

[css_jay99]

Thanks, I’ll check with him.

Instead of going through an umbrella in such circumstances, Will another ltd company suffice whereby I am paid via PAYE and maxing out pension contributions?. I think the mrs ltd is still operating even though stopped contracting for some time now

[northernladuk]

I'd second a chat with MVL Online about this. A knee jerk reaction to a tax hike might not be the most efficient way out. Highly dependant on your situation but it might be worth doing something in the tax year this year, and then maxing out opportunities next year before starting the process.

Take some detailed advice first.

[jamesbrown]

Unlikely to complete before April 6, even if you have a single bank account and all assets in cash, ready to go. I expect most practitioners have a backlog, but you can ask Maslins.

If you are offered an outside IR35 contract within two years of any distribution, you will be subject to the TAAR, at which point your simplest/cheapest option would probably be an umbrella.

[css_jay99]

I have been on inside ir35 contract for the last 4yrs and that seems to be direction of travel for a lot of companies. I was thinking of going down the BADR route to get all money out of company more so due to the upcoming tax hike

Is there still enough time to do BADR before the new tax year?

Also what are my options if I miraculously get an outside IR35 contract within the next 2 years?