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Advice please - extracting funds and closing company when director deceased

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    Advice please - extracting funds and closing company when director deceased

    Hi All
    I am a limited company contractor of 20+ years so I have a good understanding of how that works.

    I am helping the wife of a friend who passed away recently sort out her financial affairs including dealing with the limited company, which is fortunately not something I’ve had to do before.

    He had a fairly typical set up where he was the sole director and fee earner and the shareholding was split 50/50 with his wife. Before he passed away, and on the accountant’s advice, he made her a Director. And in addition, she will inherit his shares so will be the 100% shareholder.

    There will be a mid - high five figure sum left to be extracted from the company after all the liabilities are paid. She doesn’t have any other income, but doesn’t need the money immediately and will already be into the higher rate tax band for 2018/19.

    I guess one option would be to withdraw the funds as dividends over 2019/20 & 2020/21.
    I will be doing more research myself and speaking with his (large contractor) accountant and not just relying on an internet forum. But I would be very grateful for any thoughts or words of advice from anyone on other options for extracting the money in a tax efficient manner, before closing the company? For instance, is Entrepreneurs relief an option in these circumstances ? Thanks for your help.

    #2
    Originally posted by m2019 View Post
    Hi All
    I am a limited company contractor of 20+ years so I have a good understanding of how that works.

    I am helping the wife of a friend who passed away recently sort out her financial affairs including dealing with the limited company, which is fortunately not something I’ve had to do before.

    He had a fairly typical set up where he was the sole director and fee earner and the shareholding was split 50/50 with his wife. Before he passed away, and on the accountant’s advice, he made her a Director. And in addition, she will inherit his shares so will be the 100% shareholder.

    There will be a mid - high five figure sum left to be extracted from the company after all the liabilities are paid. She doesn’t have any other income, but doesn’t need the money immediately and will already be into the higher rate tax band for 2018/19.

    I guess one option would be to withdraw the funds as dividends over 2019/20 & 2020/21.
    I will be doing more research myself and speaking with his (large contractor) accountant and not just relying on an internet forum. But I would be very grateful for any thoughts or words of advice from anyone on other options for extracting the money in a tax efficient manner, before closing the company? For instance, is Entrepreneurs relief an option in these circumstances ? Thanks for your help.
    How long was she a director before the company ceased trading?

    When did the company cease trading?

    You need to answer these two questions before we can advise if ER applies.

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