3 weeks left as contractor - can I MVL now? 3 weeks left as contractor - can I MVL now?
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  1. #1

    Nervous Newbie


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    Default 3 weeks left as contractor - can I MVL now?

    Hi

    I am due to leave contracting on 21 Feb and move to a permie role in March. I still have January's and soon to be February invoices to be paid.

    Can I start a MVL process now?
    Typically how long does it take?
    If my permie job goes 'pear shaped', I assume I can return inside IR35 and via an Umbrella without any come back after liquidating?

    Thanks for any advice.

  2. #2

    My post count is Majestic

    northernladuk's Avatar
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    But of research is your friend here.

    MVL how long site:contractoruk.com/forums - Google Search
    'CUK forum personality of 2011 - Winner - Yes really!!!!

  3. #3

    Some things in Moderation

    cojak's Avatar
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    The very first thing to do is to stop trading. Get all invoices out of the way first.

    This shows you the process. Members Voluntary Liquidation Process | MVL Online

    I would advice not starting MVL for 6 months after going permie. Then you can pick the company up again if things don’t work out.
    "I can put any old tat in my sig, put quotes around it and attribute to someone of whom I've heard, to make it sound true."
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  4. #4

    Contractor Among Contractors


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    Lots of people trying to rush into liquidation now. Combination of IR35 meaning Ltd Co work drying up,
    and rumours about possible entrepreneurs relief changes in the budget making people panic they need to do it all ASAP.

    Legally a company can enter liquidation whilst still trading. Or soon after, without lots of tidy up exercise being done first. However, both will realistically lead to significantly higher liquidator fees, as the liquidator then has to run your business for you for the final few weeks, and also do lots of your tax return type work too. Hence why most of the low cost online liquidators insist you get all that stuff done first, so their role is kept as small as possible (no collecting in/settling debts, negligible tax returns to submit etc).

  5. #5

    Should post faster


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    Aug 2019
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    If your intention is to close down your LTD and seek PAYE role(s), is there anything wrong with waiting until the new tax year, maxing the dividend allowance, close company and then start PAYE ?

    I can't recall if I read it on here or somewhere else that this would cause an issue?

  6. #6

    Contractor Among Contractors


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    Quote Originally Posted by CompoundOverload View Post
    If your intention is to close down your LTD and seek PAYE role(s), is there anything wrong with waiting until the new tax year, maxing the dividend allowance, close company and then start PAYE ?

    I can't recall if I read it on here or somewhere else that this would cause an issue?
    Not really, though some are panicking re rumours of imminent entrepreneurs relief scrappage.

    Also, when you saying "maxing the dividend allowance", that's currently just £2k so quite modest. Most people don't make many capital gains, so can be better to close a bit earlier, to get the first distribution this tax year, final one next tax year. Ie getting benefit of two years of CGT annual exemption of ~£12k each, rather than two years of dividend allowance of ~£2k each.

  7. #7

    Fingers like lightning


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    Perhaps by dividend allowance they meant the 7.5% rate up to the higher earnings threshold ? That's how I interpreted it anyway.

  8. #8

    Should post faster


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    Quote Originally Posted by Maslins View Post
    Not really, though some are panicking re rumours of imminent entrepreneurs relief scrappage.

    Also, when you saying "maxing the dividend allowance", that's currently just £2k so quite modest. Most people don't make many capital gains, so can be better to close a bit earlier, to get the first distribution this tax year, final one next tax year. Ie getting benefit of two years of CGT annual exemption of ~£12k each, rather than two years of dividend allowance of ~£2k each.
    I should have been more clearer, I mean't up to the 7% divi tax allowance. Presumably, if you did go PAYE, after doing this capital distribution at the beginning of the tax year, you would simply pay the tax for the divs in Jan 2021 and the new tax code (factoring your dividends and new PAYE salary) would kick in from April 2021?

  9. #9

    Contractor Among Contractors


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    If the individual is now in PAYE/working via an umbrella, then they're likely to have significant personal income. Hence paying out dividends above the £2k dividend allowance, would quite probably already be in higher rate tax (so no 7.5% band left). Capital gains are independent of income.

    If they've retired, or taking a year or two away from work for some reason (eg full time parent), ie something which means they have negligible other income, then yes, dividends over a few years could make more sense.

  10. #10

    Super poster

    Lance's Avatar
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    Quote Originally Posted by Maslins View Post
    If the individual is now in PAYE/working via an umbrella, then they're likely to have significant personal income. Hence paying out dividends above the £2k dividend allowance, would quite probably already be in higher rate tax (so no 7.5% band left). Capital gains are independent of income.

    If they've retired, or taking a year or two away from work for some reason (eg full time parent), ie something which means they have negligible other income, then yes, dividends over a few years could make more sense.
    What about making large pension contributions as salary sacrifice?
    Taking low PAYE income and still extracting dividends? Is that possible?
    See You Next Tuesday

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