It may be that you've been offered a permanent position, fancy a career change or it’s time to retire to the sun.
Whatever the scenario, it is vital you have the right information when closing your business.
The key point when closing your business is the value of distributable reserves (also known as dividends) available in your business.
If the amount of reserves is less than £25,000 when you decide to close your business, your company can be shutdown via a straightforward process following the submission of final accounts and Corporation Tax Returns. Any amounts drawn from the business are treated as a capital gain and as such may be entitled to be taxed using Entrepreneur’s Relief.
After 1 March 2012, if your limited company has distributable reserves of over £25,000 the funds taken from the business upon closure are treated as income to the recipient and taxed at income tax rates (up to 37.5%) HOWEVER there is much more tax efficient solution to this…
The company can be entered into a Member’s Voluntary Liquidation (“MVL”) – this process entitles the recipient of the company’s reserves to both Capital Gains Allowances and Entrepreneur’s Relief, which can bring the overall tax rate down to below 10%!
Figures for illustrative purposes only and are dependent on each individual's personal circumstances.
An MVL must be carried out by a licenced Insolvency Practitioner who will be paid by the company to close the business. The tax savings available through entering the company into an MVL can far outweigh the cost of the process.
We have partnered with Cowgill Holloway to offer our clients a quick and streamlined process to closing their companies via an MVL.
We have successfully secured a competitive rate and service offering for Gorilla Accounting clients:
Initial contact from Cowgill Holloway within 48 hours of informing us of your intention to close the company;
Dedicated points of contact for the entire liquidation process;
Preparation and Submission of Closure Accounts and all HMRC submissions
Guidance as to the most tax efficient manner in which to receive your funds; and
Potential to receive funds from your business in less than 28 days after ceasing to trade
For further information regarding closing your business, please do not hesitate to contact us.