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Entrepreneurs Relief and Dividends

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My limited company ceased in March 2020 and I have about £65K to extract.  My wife and I are shareholders - 65/35 split.  My questions are:

a) can we both claim the CGT £12K allowance?

b) can we then claim the remainder as dividends?

c) if not, what is the most tax-efficient way to proceed?

thank you

Replies (4)

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By Duggimon
26th Mar 2020 11:03

£65,000 in reserves is too much to liquidate without appointing a liquidator, and is certainly too much to play around with without proper paid for advice.

I would advise you first to talk to your accountant, then to proceed with their recommendation on liquidating the company, whether a liquidator is necessary or not.

The best option for you to take depends on a number of factors, most of which you have omitted from your question.

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Replying to Duggimon:
By Tax Dragon
26th Mar 2020 11:08

^ this this this ^

Else, if it's just tax (efficiency) that bothers you, donations to charity are normally a good route to go.

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Lisa Thomas
By Insolvency Practitioner
26th Mar 2020 11:45

It sounds like you need to Liquidate via a Members Voluntary Liquidation, and then claim the entrepreneurs relief, assuming you fit the criteria.

It will probably cost c£2-2.5k in Liquidators costs.

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Replying to Insolvency Practitioner:
By ireallyshouldknowthisbut
26th Mar 2020 12:19

Well they might, we just don't know.

No doubt a competent accountant with full facts would be able to advise.

A client of mine has just extracted a similar sum without liquidation at an average tax cost of well under 5% and fee of about £500. Of course the OP's circumstances will be different to my client's we just don't know.

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