"lower CGT rate, charged at 10% on the first £1m of gains, when selling a qualifying business." - does the same apply if the business owner has cash in the business bank and decides to just close the business and personally keep / pay self the cash in the bank? I.e. if wanting to close the business instead of selling and say for example the business has 100k in its bank account left over after paying respective company profits corporation tax etc can the business owner pay that to themselves personally and then personally only be liable for the reduced 10% CGT rate and therefore personally netting 90%?
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This is the legislation which should give the definitive answer:
https://www.legislation.gov.uk/ukpga/1992/12/part/V/chapter/3
Thanks - so skimming over that it can indeed be 10% capital gains tax in respect of disposing of a business / shutting it down (up to 1 million just like with selling). Obviously a few things to check to make sure the correct law is followed. If the business owes no money then using an insolvency practitioner is typically mostly not ideal.
I did. In case you missed my inference:
- you can't get BADR on a dividend (because it's income, not a capital gain)
- you need a CGT event,
- like a capital distribution, which
- necessitates a liquidation, where assets exceed £25,000.
I did. In case you missed my inference:
- you can't get BADR on a dividend (because it's income, not a capital gain)
- you need a CGT event,
- like a capital distribution, which
- necessitates a liquidation, where assets exceed £25,000.
I would reiterate what Dulls says.
Sean - you need to read this thread and its links more carefully or you'll fall foul of my earlier post by stuffing up. This is not a DIY accountant situation.
But - obviously - it's your decision. Entirely up to you.
Thanks. The legislation link does not mention anything to do with dividends so I’m not sure this is relevant? The only relevant section i can find is 169N [F51 "(3)The rate of capital gains tax in respect of that gain is 10%, but this is subject to subsections (4) to (4B)." This talks / relates solely to business disposal not drawing a income / dividend. Thanks ( the legistlation link again: https://www.legislation.gov.uk/ukpga/1992/12/part/V/chapter/3 ).
Sean, you are so far wide of the mark it's almost impossible to see where you are.
You have made basic errors in understanding what's involved here.
When others have given you good advice you've ignored, questioned or dismissed their advice and blundered on without understanding what you are doing.
Classic that you can say 'so skimming over .......'! Even if somebody is experienced in reading tax law (which you clearly aren't) they would never 'skim over' the legislation.
Consider spend some of your potential £100k getting proper advice. The route you are going will cost you £'000s.
I disagree - you were rude not helpful or constructive. Certain ways to say things. Refer to pretty much everyone else's responses here and compare against how you responded and hopefully you should see clearly how to be constructive when responding and not just plain rude / condescending. You sound like an accountant so when you are asking for help from other proffesions outside of accountancy that you have no expertise in you wouldnt apreciate being spoken to by them in the way you have spoen to me here (nor would many people generally to be honest). Take my feedback or not but rest assured the above is certainly not helping you in life... Anyway thanks all for the insights and information i will seek proper advise on this.
Actually it appears that my post (emphasizing what everyone else has been telling you) has assisted you in finally realising that you are out of your depth and were going on a route leading to you making big mistakes......... and information i will seek proper advise on this.
You should be thanking me rather than attempting to chastise.
SeanGrey wrote:
........ and information i will seek proper advise on this.
Actually it appears that my post (emphasizing what everyone else has been telling you) has assisted you in finally realising that you are out of your depth and were going on a route leading to you making big mistakes.
You should be thanking me rather than attempting to chastise.
Or save face.
No need to be rude...
Sean, you're an ungrateful fool. We get hundreds of cockeyed plans proposed on the forum. It's typical that folk flounce off when they're told their plan won't work.
Dulls has told you why the plan won't work. IP has invited you to contact her. What more do you want?
Ok, I give up as seems like a bunch of you are grumpy to put it nicely and not really here to help aid a constructive conducive environment as I am sure this forum was originally designed for. I have quite a few clients like you from your profession who I don't speak to like this as overall being horrible to people for no real reason apart from your attitude to 'n00bs' in the long run is not productive. Take care.
Shouting at people is not the way to change the facts with which they're responding ... although it may tend to colour potential responders' opinion of you.
You obviously have a short-term memory because it was only a year ago that you replied "Crikey. Was not expecting such complete negativity" after being told that a crackpot post was just that (and why).
The point of posting questions is to get answers, not an endorsement of yourself.
Ok, I give up as seems like a bunch of you are grumpy to put it nicely and not really here to help aid a constructive conducive environment as I am sure this forum was originally designed for. I have quite a few clients like you from your profession who I don't speak to like this as overall being horrible to people for no real reason apart from your attitude to 'n00bs' in the long run is not productive. Take care.
You’ve gone from someone who apparently doesn’t look ‘at the cheap options’..Am looking for good professional people’ to being a freeloader who then cannot be bothered reading what people say and expecting bespoke advice.
This forum was never designed for such, it was always a place where Accountant swapped information with other Accountants.
You cannot say you have clients ‘like me’ as you know nothing about me, but clearly the people who you think are like me are actually paying your fees, whilst you expect freebies. It was you who was rude despite the help you’ve been given, but it’s a typical response from business owner who would rather DIY, thinking they can save a few quid, despite the fact that your lack of knowledge will cost you thousands instead.
Do you do your own root canal work as well?
Thanks. The legislation link does not mention anything to do with dividends so I’m not sure this is relevant? The only relevant section i can find is 169N [F51 "(3)The rate of capital gains tax in respect of that gain is 10%, but this is subject to subsections (4) to (4B)." This talks / relates solely to business disposal not drawing a income / dividend. Thanks ( the legistlation link again: https://www.legislation.gov.uk/ukpga/1992/12/part/V/chapter/3 ).
You're right, Sean. It doesn't apply to a dividend. That's the problem. See Dulls' first comment, the very first reply in the thread.
At £100,000 it really needs to be done correctly.
Tax planning for a dividend and winding up of the company.
Planner would need more than you have posted, because the dividend plan depends on other taxable income of the shareholders
No, no, no ... right, that's the 3 questions answered.
The clues as to alternative potential options are in the other replies - but for more detail that is suitable to your personal circumstances speak to an (appointed) accountant.
DIY is a recipe for disaster here, fella.
Do the sensible thing and get an accountant pronto.
If, as your post suggests, the company has net assets considerably in excess of £25K, you may be well advised to speak to a licensed insolvency practitioner in order to have the company wrapped up properly and coming under the umbrella of CGT. That does not necessarily mean that BADR would be available.
It sounds to me that you might need to wash this through a Members Voluntary Liquidation ("MVL") in order to claim the BADR.
You need a licensed Insolvency Practitioner to help with this procedure.
I'd be happy to chat to you and explain the process.
Feel free to contact me.
