The Book-keepers Forum (BKF)

Post Info TOPIC: Advice on what to do with money in a limited company


Newbie

Status: Offline
Posts: 2
Date:
Advice on what to do with money in a limited company


Hi all

 

First post so hope i dont break any posting rules!

 

Ive had a limited company for several years now and have built up capital in it but switched to a perm role after the introduction of IR35 in the private sector. My salary is just below 100k and now im stuck. If i start drawing dividends and salary from my company in parallel i will go over the threshold and lose my tax free allowance. I know this is a nice place to be given the current climate and scarcity of resource but does anyone have any suggestions on how best to begin winding up my company without paying an exorbitant amount of tax every year

 

Thanks for any suggestions



__________________


Forum Moderator & Expert

Status: Offline
Posts: 11981
Date:

Why would you pay tax every year?

You pay tax on earnings. If the money is just sitting in your company its already been taxed once. You only pay tax again if you take it out of the company.

Have you thought about talking to a financial advisor about using the money in the company to set up a pension? It would build over the years then on retirement you get a third of it tax free and an income for life.

Sometimes the third of the pot is all of the money you have actually put into it depending on how long its been in there.

I am not a financial advisor, this is not advice but it is something that you should perhaps consider.


__________________

Shaun

Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.



Guru

Status: Offline
Posts: 1313
Date:

How much retained profits in the Company?

__________________

Doug

These are only my opinions of how I see things and therefore should not be taken as advice



Newbie

Status: Offline
Posts: 2
Date:

Hi Over 150k

__________________


Master Book-keeper

Status: Offline
Posts: 3904
Date:

Pensions sprung to my mind as well.  Good advice from Shaun, well worth paying a financial advisor for tailored advice.



__________________

John 

 

 

 Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.



Senior Member

Status: Offline
Posts: 205
Date:

If you want the money quickly, you can do a mixture of capital distribution and dividends.

You may as well use your dividend allowance of £2,000.

Next stage would be a capital distribution. If remaining accumulated profits are less than £25,000 then you do a capital distribution. The first £12,300 will be covered by your annual capital gains tax allowance. The remainder would be chargeable at 10% (if the distribution qualifies under the Business Asset Disposal Relief (formerly Entrepreneur's Relief)).

If remaining accumulated profits are more than £25,000 then you do a capital distribution but you would first have to go through the process of a Members Voluntary Liquidation which will cost between £1,500 to £2,000. Again, the first £12,300 will be covered by your annual capital gains tax allowance. The remainder would be chargeable at 10% (if the distribution qualifies under the Business Asset Disposal Relief (formerly Entrepreneur's Relief)).

You can read more about the MVL route here.



__________________

Your local accountant

 

 

Page 1 of 1  sorted by
 
Quick Reply

Please log in to post quick replies.

Tweet this page Post to Digg Post to Del.icio.us
Members Login
Username 
 
Password 
    Remember Me  
©2007-2024 The Book-keepers Forum (BKF). All Rights Reserved. The Book-keepers Forum (BKF) is a trading division of Bookcert Ltd. Registered in England Company Number 05782923. 2 Laurel House, 1 Station Rd, Worle, Weston-super-Mare, North Somerset, BS22 6AR, United Kingdom. The Book-keepers Forum and BKF are trademarks of Bookcert Ltd. This forum is a discussion forum only. There will usually be more than one opinion to any question and any posting should not be viewed as a definitive solution. No responsibility for loss occasioned to any person acting or refraining from action as a result of any posting on this site is accepted by the contributors or The Book-keepers Forum. In all cases, appropriate professional advice should be sought before making a decision. We reserve the right to remove any postings which are offensive, libellous, self-promoting or engaged in covert marketing. We will not notify users of removals. The views expressed in the forum posts are those of the individual and do not necessary reflect or agree with those of The Book-keepers Forum. Any offensive or unsuitable posts will be removed by the moderators. Any reader of this forum can request for a post to be looked into by sending an email to: bookcertltd@gmail.com.

Privacy & Cookie Policy  About