to close or not to close, that is the question

[hgllgh]

[QUOTE=hgllgh;614224]but again ... it all comes back to getting the money out of the business account and working for you ....

For arguements sake (but the figures are roughly accurate)...

200K released capital in a cash account at 5% is 10K a year interest.
this would cover my rent.

200K released capital uset to buy a flat instead of 5% mortgage interest rate is 10K a year saved.

The only downside is paying the 10% CGT rather than than trying to extract the divs at 0% below the higher earnings threshold.

QUOTE]


Actually I take that back ... in personal finance terms rule number 1 is to clear your debts ... you biggest debt is going to be your mortgage.

For arguements sake...

If I don't close the company down ...
At the end of a 25 year mortgage term I've paid approx 250K mortgage interest but own a property so I've spent 200K for the property and 250K interest = 450K. If I rent ... at the end of a 25 rental I've paid 250K rent but own nothing. (Both of these options would need to come out of the existing 200K + 25 years of salary and divs.)


If I close the company down and get the 200K and use that to buy a property cash ... at the end of a 25 year term I've paid 200K and no mortgage interest AND own a property ... this compares with the 450K above. All future salary and divs from the point I buy the property can be invested and earn interest.

Again ... am I missing something?

[kanulondon]

but again ... it all comes back to getting the money out of the business account and working for you ....

For arguements sake (but the figures are roughly accurate)...

200K released capital in a cash account at 5% is 10K a year interest.
this would cover my rent.

200K released capital uset to buy a flat instead of 5% mortgage interest rate is 10K a year saved.

The only downside is paying the 10% CGT rather than than trying to extract the divs at 0% below the higher earnings threshold.

Yeh ... need to talk to an accountant ... anyone recommend an accountant who has can offer me good advice?

PM me for accountant details....

[malvolio]

...rather than than trying to extract the divs at 0% below the higher earnings threshold

Simple - for £200k you can't, in less than 7 years...

[hgllgh]

but again ... it all comes back to getting the money out of the business account and working for you ....

For arguements sake (but the figures are roughly accurate)...

200K released capital in a cash account at 5% is 10K a year interest.
this would cover my rent.

200K released capital uset to buy a flat instead of 5% mortgage interest rate is 10K a year saved.

The only downside is paying the 10% CGT rather than than trying to extract the divs at 0% below the higher earnings threshold.

Yeh ... need to talk to an accountant ... anyone recommend an accountant who has can offer me good advice?

[malvolio]

That's why I sugested an accountant in the first place. This is all pure conjecture and may be wrong - and don't quote me on the numbers (accountants, where are you!) - but you can take the net value of the company out at 10% CGT and put it into something that will accumulate (slowly, admittedly, but it will at least stay with inflation over time) for a few years and then release it. At the same time you are not spending £1k a month repaying a loan of around the same size as your released capital.

That has to be better than taking it out at 23% marginal tax and getting 5% net for it, surely?

[pmeswani]

Maybe, but that would defeat the object wouldn't it. The point is that I have an excuse to close the company down as I will be travelling, enabling me to get at the money and avoid a mortgage...

Dunno if it would defeat the object.... I just see it as unecessary hassle. Surely you (as the individual and not the company) may still have to pay tax on the money that you take out of the business in the form of self assessment. Why not just take the amount you need as a loan and give yourself 0% dividends until the loan has been paid off?

However, I can see myself missing the point.

[hgllgh]

Would it be possible to get a family member who isn't travelling with you to act as a company secretary / director and sign your returns on your behalf, therefore leaving some money in the business for when you return to contracting?

Maybe, but that would defeat the object wouldn't it. The point is that I have an excuse to close the company down as I will be travelling, enabling me to get at the money and avoid a mortgage...

[pmeswani]

Or an accountant?

Hang on - PLAN B - I'll do it (for a fee)

Good plan B. Can I get a cut for indirectly helping you get that idea?

[BA to the Stars]

Would it be possible to get a family member who isn't travelling with you to act as a company secretary / director and sign your returns on your behalf, therefore leaving some money in the business for when you return to contracting?

Or an accountant?

Hang on - PLAN B - I'll do it (for a fee)

[pmeswani]

I will be travelling the globe for five or six months in a few months time.
So I won't be in the UK to submit returns, run the company etc.
If I apply for ESC16 Capital Gains Tax and pay 10% tax on monies left in business account after corp tax has been paid I would still have enough to buy a flat - cash - no mortgage - which in the long run would save quite a lot (If i just do the usual salary + divs it would take years to get the dosh out so I would need a fair old mortgage)

Am I missing something or is that actually the best thing to do in terms of long term personal wealth? After all, it is a lot of hastle closing your company down and applying for ESC16 etc...

Would it be possible to get a family member who isn't travelling with you to act as a company secretary / director and sign your returns on your behalf, therefore leaving some money in the business for when you return to contracting?

[hgllgh]

I suppose the only risk with thsi kind of strategy is that my whole career earnings would be tied up in a property which initially would probably be going down in value as opposed to up in value in a savings account?

Even so, saving over a grand a month not having to pay mortgage interest would still win out?

[malvolio]

You need an accountant to do the sums properly, but on the face of it, it looks like a good idea to me...

[hgllgh]

I will be travelling the globe for five or six months in a few months time.
So I won't be in the UK to submit returns, run the company etc.
If I apply for ESC16 Capital Gains Tax and pay 10% tax on monies left in business account after corp tax has been paid I would still have enough to buy a flat - cash - no mortgage - which in the long run would save quite a lot (If i just do the usual salary + divs it would take years to get the dosh out so I would need a fair old mortgage)

Am I missing something or is that actually the best thing to do in terms of long term personal wealth? After all, it is a lot of hastle closing your company down and applying for ESC16 etc...