I took a full time PAYE position a couple of years ago and haven't had any trading in my LTD for around 18 months. I've been slow to enter anything like dormancy / closure due to being super busy, I miss being my own boss
In my time running the LTD I amassed a war chest which totals ~£60k, which felt prudent. It feels a bit like it is trapped in there now. I'd like to stop spending accountancy fees and reduce the war chest. Dividend tax rates have changed since most of it was amassed. It feels like wrapping up is my easiest option. I know the top three options are valid, but what about my other options:
Thoughts for reducing company capital:
I'm not looking to reduce the tax bill below what it should have been if I had been better prepared / organised. I dn't want to do anything that could be taken as Tax Avoidance . Making a pension contribution would be nice as my pension hasn't received the love it should have, but it is painful that it is post Corporation Tax so could have been 25% more.
In my time running the LTD I amassed a war chest which totals ~£60k, which felt prudent. It feels a bit like it is trapped in there now. I'd like to stop spending accountancy fees and reduce the war chest. Dividend tax rates have changed since most of it was amassed. It feels like wrapping up is my easiest option. I know the top three options are valid, but what about my other options:
- Dormancy - put it on ice, taking <£2k dividend tax free for next 30 years, not that patient.
- Striking Off - could take £25k as Capital Gain at 10% tax, rest as dividend taxed at 32.5%.
- MVL - could take full amount as Capital Gain at 10% tax. Can't go back to contracting for at least two years which could turn out to be a problem. I've been quoted about £3k of fees to arrange an MVL.
- Reduce company capital prior to Striking Off or MVL.
Thoughts for reducing company capital:
- Pension Contribution - could I make a ~£35k pension prior to Striking Off. This would be tax free, but would be from post Corporation Tax capital so inefficient in comparison to having done it in the tax year it was earned. Under any other circumstances, making a pension contribution would be an option open to me that results in lower tax so I hope it wouldn't be considered tax avoidance.
- Company buys back my shares - am I able to sell the company back my shares at a rate of <£12k per year. This would represent a personal capital gain, but less than the £12k tax free allowance.
I'm not looking to reduce the tax bill below what it should have been if I had been better prepared / organised. I dn't want to do anything that could be taken as Tax Avoidance . Making a pension contribution would be nice as my pension hasn't received the love it should have, but it is painful that it is post Corporation Tax so could have been 25% more.
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