Company Wind Up

[Rictastic]

Hi

Has anyone had experience with winding up a limited company and the most tax efficient method for doing this:

My last invoice/payment will come through mid October (2019) and I plan on moving back to NZ mid December, on the last payment I'll have around £90000 in my company bank account (so let say £80000(ish) retained profit) I also have been drawing £3000/Month plus £165/week director fees

I'm wondering if it's tax efficent to continue the £3000/month drawings until the next tax year in April 2020, the withdrawing the next years £3000 x 12 and then winding up via MVL in the next tax year thereby reducing profits to be taxed

Or

If it's best just to start MVL immediately after my last payment in October

Or

Something else?

[northernladuk]

You need to speak to Maslin at MVLOnline with those figures.

He's a contractor accountant as well so can add the efficiency advice as well.

[Maslins]

Do you anticipate earning significant money in NZ from fairly soon after you arrive there (whether that be from some kind of business vehicle you set up, permanent role, or even pension)? If so, then your drip feeding dividends idea probably isn't great. Those dividends would likely be taxable in NZ at whatever your marginal rate would be. I have zero clue what NZ tax rules are like, but if you'll be on a salary of the equivalent of £50k and their tax rules are similar to ours, then those dividends would be taxed at higher rates.

Some might say I'm biased, but I think it makes sense to get a clean break and do an MVL. Yes you'll suffer the fairly modest CGT in the UK. However you can then take those post tax funds to NZ without worrying admin/further tax consequences relating to your old company, or any impact on NZ tax rules.

...having said that, would be a good idea to have a quick chat with an NZ based tax adviser, in case they have some quirky rules that make the above daft.

[Rictastic]

Hi

Yeah I probably would be earning upwards of £50,000 equivalent, although I'm pretty sure NZ/UK have a double taxation treaty, which I think means if my tax on UK dividends/CG etc is paid within the UK then it won't be considered for NZ taxation

Also if I had to wait until Mar/Apr to start looking for work in NZ to contain all income into the current UK tax year, it wouldn't be a problem

I'm hoping that that would mean that the fact that I've moved to NZ is somewhat irrelevant regarding how it's tax in the UK.... but yes, as you've said probably best to talk to someone in NZ

[Maslins]

Yeah I probably would be earning upwards of £50,000 equivalent, although I'm pretty sure NZ/UK have a double taxation treaty, which I think means if my tax on UK dividends/CG etc is paid within the UK then it won't be considered for NZ taxation

If you're move is expected to be semi permanent, and you move in Dec 19, then I expect you'd become tax resident in NZ from the date you move. Any dividends paid out of your UK company after that date would then be taxable in NZ, not in the UK.

Ie so if you drip fed dividends after that date, your UK taxable income would be £nil, and your NZ taxable income would be £50k+ (new salary) PLUS £36k (your £3k/month dividends). If you're anticipating that your NZ salary would be taxable in NZ, and your dividends taxable in UK, each receiving the equivalent of personal allowance/basic rate band in the different country, I think you'll be disappointed.

[Rictastic]

ok, so it's looking like withdrawing an amount to take this years dividends up to around the £36,000 mark fairly soon and then starting with an MVL upon payment of my last invoice which will be around mid October

[JohntheBike]

Hi

Has anyone had experience with winding up a limited company and the most tax efficient method for doing this:

My last invoice/payment will come through mid October (2019) and I plan on moving back to NZ mid December, on the last payment I'll have around £90000 in my company bank account (so let say £80000(ish) retained profit) I also have been drawing £3000/Month plus £165/week director fees

I'm wondering if it's tax efficent to continue the £3000/month drawings until the next tax year in April 2020, the withdrawing the next years £3000 x 12 and then winding up via MVL in the next tax year thereby reducing profits to be taxed

Or

If it's best just to start MVL immediately after my last payment in October

Or

Something else?

I seem to remember another query from an Antipodean where he left funds in his Ltd Co. after returning home, which he eventually lost. So I'd look into that situation to ensure you do't lose any money.

[northernladuk]

I seem to remember another query from an Antipodean where he left funds in his Ltd Co. after returning home, which he eventually lost. So I'd look into that situation to ensure you do't lose any money.

Anything more to help at all? Further context? Links? What situation?

I'd take a guess, seems that all we can do with that information, that the company got struck off and assets became bona vacantia. As the OP is doing things properly there is little chance of that happening.

[fidot]

Think it is this one https://www.contractoruk.com/forums/...=Bona+vacantia

[Rictastic]

I spoke to a NZ tax accountant and he informed me that NZ had a 4 year tax exemption for returning citizens on overseas income (implemented to entice skilled workers back to NZ)

Temporary tax exemption

So I'm thinking once I'm back in NZ and qualified as a NZ tax resident, I can just transfer the bulk of my companies cash to my NZ account and then just wind up my company using an straight forward MVL (with cash under £25000)