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Retained Earning in Limited Company and ADS

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    Retained Earning in Limited Company and ADS

    Hi All,

    I am currently facing two situations and I was wondering if I could possibly combine both of them together to achieve what I am looking for.

    Situation 1:
    I have own a Limited Company from my time as a Accountancy contractor but it has been sitting inactive from Dec 2019 since I got a new role as a PAYE contractor. I do have £56K worth of retained earning where I am thinking of going through a MVL as the most cost-effective way to extract this.

    Situation 2:
    I am in the fortunate situation where I own my own flat and I am in the process of buying a new house. I plan to keep the flat and as I live in Scotland I am liable to Additional Dwelling Tax ("ADS"). Even with the very recent change to the LBTT tax rules + ADS, my tax charge could be at least £13k.

    Combine:
    Is it possible to firstly change the services of my limited company from accountancy to property. Use the retained earnings from my property limited company (it won't be all of £56k as I need to keep some back for 19/20 corporation tax) to purchase my current flat. And thus being able to extract my retained earning without paying tax. (will of course incur solicitor fees)

    As the flat is no longer in my name but the name of my property limited company I will avoid paying ADS. In the long run I do plan to rent out my flat and I believe there are potential tax savings if it was rented out as a property limited company.

    Has anybody encountered a situation like this or is anybody able to provide any advice please?

    Alternatively can someone recommend a financial adviser/planner preferably based in Scotland that I could talk this through with?

    Many thanks in advance

    #2
    I’m not sure an IT contractor forum can help an accountant with a non-IT related question....

    The normal first suggestion is to see what your accountant advises but I guess that’s you?
    Try one of the accountancy forums, or, as you’ve already identified you’ll need a solicitor, go straight there.
    See You Next Tuesday

    Comment


      #3
      Originally posted by Lance View Post
      I’m not sure an IT contractor forum can help an accountant with a non-IT related question....
      Not all members here are in IT, and it's question about using your ltd co to buy property.
      Down with racism. Long live miscegenation!

      Comment


        #4
        Originally posted by NotAllThere View Post
        Not all members here are in IT, and it's question about using your ltd co to buy property.
        Maybe I misread the question but I interpreted it as an accountant asking a legal/accounting question, in a forum mostly populated by lay men in those areas.
        Hence my suggestion.
        See You Next Tuesday

        Comment


          #5
          Originally posted by Lance View Post
          Maybe I misread the question but I interpreted it as an accountant asking a legal/accounting question, in a forum mostly populated by lay men in those areas.
          Hence my suggestion.
          An accountancy contractor, which to me seems like an IT contractor but doing accounting stuff instead of buying Lamborghini's

          Comment

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