Closing my ltd company: help me take away the pain

[jamesbrown]

I think you're very unlikely to have an employer pension contribution not meet the wholly and exclusively test, regardless of how large it is. Large payments are routine with the carry forward rules.

Making payments that exceed profits in a given year is another matter, though...

[northernladuk]

I though that.
But forcing your LTD company into a loss by paying excessive pension payments is a no-no.
It's the deliberate act of paying into pension when there isn't any current operating profit that's the issue.
The fact that it's retained profit makes no odds.

That's according to my accountant.

Yep we've had similar comments from accountants to that end before. I believe 'CTM60670 - Close companies: extended meaning of distribution: payments to participators - excessive amounts' which mentions excessive payments exceeding reasonable commercial considerations being an issue and not getting the relief on it you expect.

There are a whole host of BIM's on examples of what is trade and allowable or excessive and not but they can get very confusing.

But whatever.. WLS.

[Lance]

I'd be tempted to pay a lot of it into pension fund

I though that.
But forcing your LTD company into a loss by paying excessive pension payments is a no-no.
It's the deliberate act of paying into pension when there isn't any current operating profit that's the issue.
The fact that it's retained profit makes no odds.

That's according to my accountant.

[ChimpMaster]

Yes, you should probably take the hit and get over yourself .

You're unlikely to do any better than 10%. If you're working through an umbrella, you're already maxing out your pension and salary/dividends probably aren't a good option either. If you have no clear use for the company in the next year or two, it is costing you to maintain it, with little upside.

Oh, and BADR won't be around forever. In fact, perhaps not beyond next April (we've been speculating for years, of course, but Labour has explicitly targeted it in the recent past).

Years and years of speculation around ER and BADR has resulted in nothing other than a little nerfing, enough to p1ss off the big wigs but unlikely to affect 99% of Ltd Co owners that MVL or sell. I MVL'd a couple of years ago and even then there was constant noise about how BADR would be removed. Yes it worried me, but fortunately (in a way) it was the right time for me to retire from contracting and so I rushed through my liquidation.

Moneyboxing was another term thrown around in buckets at the time. Again, worried me as that was part of my retirement planning, but again the bark was worse than the bite.

But yes, OP should just take the very beneficial 10% hit and move on. It's one of the most important aspects of running a business, having the choice to use BADR at the end.

[CoolCat]

I'd be tempted to pay a lot of it into pension fund

[Elliegirl]

What to do is highly dependant on the amounts and your personal situation so not something we can really help with.
[/QUOTE]

Oh, I wouldn't say that. You were all extremely helpful.

[Elliegirl]

Thanks for all comments, even from those who misunderstood, I still care about you! 😂😂
Have called in the Liquidators. Thanks Ltd Co, it was fun.

[TheDude]

Just closed mine - had about £12k in it.

Those days are gone.

[sreed]

Greetings all, haven't been here for a while. I've been umbrella for nearly two years and thinking of closing my ltd company. Have to do it with liquidators due to amount involved. But then I thought of the tax hit at 10% and wondered if there's another way around it, going dormant, etc. I don't see myself getting out of IR35 contracts any time soon. What's anyone else done? Should I just take the hit and get over myself? I'm not averse to paying taxes by the way, it's just that this stings a bit...😂

My ltd co is in a similar situation though not a huge amount of cash in it. My plan is to whittle it down and eventually close it.

But if I was in your place and I could get the cash out with a 10% tax hit and be done with it, I’d do that. You never know how long this low tax route to exit will be available.

[Eirikur]

Closed mine last year, transferred most assets to my pension fund, so I went under the liquidators limit. Accountant that assisted with the final accounts (Gorilla) was rubbish so the whole process from initiating until actual strike off took 7-8 months

[jamesbrown]

You can dissolve your company for a token payment at companies house. It's called the SpongeBob method, explained on the UK business forums, but can't be done if you have a Covid BBL or major creditors as they will object.

What part of?

Have to do it with liquidators due to amount involved.

[Unix]

Greetings all, haven't been here for a while. I've been umbrella for nearly two years and thinking of closing my ltd company. Have to do it with liquidators due to amount involved. But then I thought of the tax hit at 10% and wondered if there's another way around it, going dormant, etc. I don't see myself getting out of IR35 contracts any time soon. What's anyone else done? Should I just take the hit and get over myself? I'm not averse to paying taxes by the way, it's just that this stings a bit...😂

You can dissolve your company for a token payment at companies house. It's called the SpongeBob method, explained on the UK business forums, but can't be done if you have a Covid BBL or major creditors as they will object.

[jamesbrown]

Yes, you should probably take the hit and get over yourself .

You're unlikely to do any better than 10%. If you're working through an umbrella, you're already maxing out your pension and salary/dividends probably aren't a good option either. If you have no clear use for the company in the next year or two, it is costing you to maintain it, with little upside.

Oh, and BADR won't be around forever. In fact, perhaps not beyond next April (we've been speculating for years, of course, but Labour has explicitly targeted it in the recent past).

[northernladuk]

Speak to Chris Maslin at MVL Online. He's also part of Maslins accountancy so can give you both sides of the story.

What to do is highly dependant on the amounts and your personal situation so not something we can really help with.

[Elliegirl]

Greetings all, haven't been here for a while. I've been umbrella for nearly two years and thinking of closing my ltd company. Have to do it with liquidators due to amount involved. But then I thought of the tax hit at 10% and wondered if there's another way around it, going dormant, etc. I don't see myself getting out of IR35 contracts any time soon. What's anyone else done? Should I just take the hit and get over myself? I'm not averse to paying taxes by the way, it's just that this stings a bit...😂