I have a small non trading client [ceased trading 31/03/2015] with undistributed reserves exceeding the cash held of approx. £40K. Dividends have been paid each month since trading ceased but the client now wants to wind up matters by 31/03/2016 and distribute the remaining cash to shareholders so company can be struck off.
I believe that the maximum distribution for it to be treated as capital and therefore for CGT to kick in is £25K but with £40K approx. to remove from the company to shareholders it seems that such a value will attract Income Tax on the whole amount - two of the shareholders are already significant higher rate taxpayers.he third shareholder is their other trading company who own 50% of the shares.
Any ideas how best to approach this one and extract in the most tax efficient manner? I am also wondering whether Entrepreneurs Relief could also apply as the company traded up to 31/03/2015?