Closing down LTD and moving abroad

Efficiently extracting the money from LTD to move abroad

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Hello, hope you're doing well everyone.

I'm moving abroad in a few months which will lead to me closing down my LTD company. I already took the salary from April (£1,047.50) and have about £15,000 left (after paying corporation tax). I would like to use the remaining cash to pay myself a salary up to the personal allowance in order to save CT and also get one year of NI contributions.
My understanding is, that such a high salary at the beginning of the the tax year will cause a big tax bill (since HMRC is going to assume that I'll get this salary each month for the rest of the year). Is there a way to avoid getting overtaxed? Assuming this will be the last payslip (final FPS), won't HMRC should account for that and not overtax me?

Thank you

Replies (12)

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DougScott
By Dougscott
06th May 2024 09:19

"Pecih" asked practically the same question on 3rd May - look at that thread.

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Replying to Dougscott:
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By Paul Crowley
06th May 2024 16:21

What a coincidence.

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By Leywood
06th May 2024 09:43

Ask your Accountant.

This forum is not here to provide free tax advice for the public.

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Replying to Leywood:
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By RAS1
07th May 2024 13:02

And ask that accountant whether it would be better to take a dividend.
You might get a pleasant surprise at how little tax you have to pay.

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By cayol
06th May 2024 15:15

I don't see a problem. Your accounting software should properly calculate everything and HMRC won't overtax you since that's the final payslip (make sure to mark that so).

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Replying to cayol:
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By FactChecker
06th May 2024 16:58

Could you tell us from where you acquired your rose-tinted spectacles?

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Replying to FactChecker:
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By cayol
06th May 2024 17:42

FactChecker wrote:

Could you tell us from where you acquired your rose-tinted spectacles?

I did that for clients before and spoke to HMRC beforehand, there were 0 issues absolutely.

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paddle steamer
By DJKL
06th May 2024 15:51

How do you usually process payroll re NI, month by month calc or averaging, because if the former you may not acquire an NI year from one month's over threshold payroll. (No idea required weeks needed to qualify a year but do suspect there is a minimum, otherwise everyone would play the system throwing through one month over threshold.)

Not sure how you avoid the tax code issue paying salary all in first 2-3 months of the new tax year, suspect you will need to later chase a personal tax refund .

Have you considered how these earnings will get reported/taxed where you are going, this might also be worth investigating- your tax residence in 2024/2025 certainly needs considered.

I would visit an accountant.

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Replying to DJKL:
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By lalmazaste
06th May 2024 15:56

DJKL wrote:

How do you usually process payroll re NI, month by month calc or averaging, because if the former you may not acquire an NI year from one month's over threshold payroll. (No idea required weeks needed to qualify a year but do suspect there is a minimum, otherwise everyone would play the system throwing through one month over threshold.)

Not sure how you avoid the tax code issue paying salary all in first 2-3 months of the new tax year, suspect you will need to later chase a personal tax refund .

Have you considered how these earnings will get reported/taxed where you are going, this might also be worth investigating- your tax residence in 2024/2025 certainly needs considered.

I would visit an accountant.

I do payroll monthly. I think you still get NI after the threshold, because well, you paid NI. otherwise, working 11 months will make you ineligible for state pension?

+ you can buy NI years voluntarily, without even working.

About the tax residency, not an issue since I'll apply for the split year treatment and the target country where I'm moving to has 0% income tax.

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Replying to lalmazaste:
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By FactChecker
06th May 2024 16:55

"otherwise, working 11 months will make you ineligible for state pension?"
... yup (to be precise that 'year' won't count when they tot up 'contribution years').

Or in more official language:
"The individual needs to have paid, or be treated as having paid, NICs for the full tax year to make a qualifying year - i.e. they need to have paid, or be treated as having paid, 52 weeks' worth of NI contributions."

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Replying to FactChecker:
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By Paul Crowley
06th May 2024 20:41

Directors om annual calculations exceeding the annual lower limit will qualify, or at least. that is what I understood to be the case.

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Replying to Paul Crowley:
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By FactChecker
06th May 2024 22:32

Interesting ... I follow your logic, but honestly don't know.

It obviously doesn't work for a non-Director (as in paying oodles of NI on a massive salary for say 11 months won't get you a 'qualifying year' for pension purposes if you take the remaining month off) - and I know it doesn't work for a Director who takes up the directorship *during* the tax year (all the weeks prior to that date must be fully paid for there to be any chance of a qualifying year).

BUT, if a Director leaves before the end of a tax year then the calc of NI (assuming it is on annual basis which is always the case when a Director steps down in-year) uses the 'whole year' figures (e.g. for threshold etc).
Whether that then translates into a qualifying year is a good question ... logical as I said, but I'm not certain.

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