to close or not to close, that is the question

**malvolio** · 21 August 2008, 13:40

You need an accountant to do the sums properly, but on the face of it, it looks like a good idea to me...

**hgllgh** · 22 August 2008, 08:52

I suppose the only risk with thsi kind of strategy is that my whole career earnings would be tied up in a property which initially would probably be going down in value as opposed to up in value in a savings account?

Even so, saving over a grand a month not having to pay mortgage interest would still win out?

**pmeswani** · 22 August 2008, 09:04

Originally posted by hgllgh View Post

I will be travelling the globe for five or six months in a few months time.
So I won't be in the UK to submit returns, run the company etc.
If I apply for ESC16 Capital Gains Tax and pay 10% tax on monies left in business account after corp tax has been paid I would still have enough to buy a flat - cash - no mortgage - which in the long run would save quite a lot

(If i just do the usual salary + divs it would take years to get the dosh out so I would need a fair old mortgage)

Am I missing something or is that actually the best thing to do in terms of long term personal wealth? After all, it is a lot of hastle closing your company down and applying for ESC16 etc...

Would it be possible to get a family member who isn't travelling with you to act as a company secretary / director and sign your returns on your behalf, therefore leaving some money in the business for when you return to contracting?

**BA to the Stars** · 22 August 2008, 10:34

Originally posted by pmeswani View Post

Would it be possible to get a family member who isn't travelling with you to act as a company secretary / director and sign your returns on your behalf, therefore leaving some money in the business for when you return to contracting?

Or an accountant?

Hang on - PLAN B - I'll do it (for a fee)

**pmeswani** · 22 August 2008, 10:40

Originally posted by BA to the Stars View Post

Or an accountant?

Hang on - PLAN B - I'll do it (for a fee)

Good plan B. Can I get a cut for indirectly helping you get that idea?

**hgllgh** · 22 August 2008, 11:30

Originally posted by pmeswani View Post

Would it be possible to get a family member who isn't travelling with you to act as a company secretary / director and sign your returns on your behalf, therefore leaving some money in the business for when you return to contracting?

Maybe, but that would defeat the object wouldn't it. The point is that I have an excuse to close the company down as I will be travelling, enabling me to get at the money and avoid a mortgage...

**pmeswani** · 22 August 2008, 11:42

Originally posted by hgllgh View Post

Maybe, but that would defeat the object wouldn't it. The point is that I have an excuse to close the company down as I will be travelling, enabling me to get at the money and avoid a mortgage...

Dunno if it would defeat the object.... I just see it as unecessary hassle. Surely you (as the individual and not the company) may still have to pay tax on the money that you take out of the business in the form of self assessment. Why not just take the amount you need as a loan and give yourself 0% dividends until the loan has been paid off?

However, I can see myself missing the point.

**malvolio** · 22 August 2008, 11:59

That's why I sugested an accountant in the first place. This is all pure conjecture and may be wrong - and don't quote me on the numbers (accountants, where are you!) - but you can take the net value of the company out at 10% CGT and put it into something that will accumulate (slowly, admittedly, but it will at least stay with inflation over time) for a few years and then release it. At the same time you are not spending £1k a month repaying a loan of around the same size as your released capital.

That has to be better than taking it out at 23% marginal tax and getting 5% net for it, surely?

**hgllgh** · 22 August 2008, 12:24

but again ... it all comes back to getting the money out of the business account and working for you ....

For arguements sake (but the figures are roughly accurate)...

200K released capital in a cash account at 5% is 10K a year interest.
this would cover my rent.

200K released capital uset to buy a flat instead of 5% mortgage interest rate is 10K a year saved.

The only downside is paying the 10% CGT rather than than trying to extract the divs at 0% below the higher earnings threshold.

Yeh ... need to talk to an accountant ... anyone recommend an accountant who has can offer me good advice?

to close or not to close, that is the question