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How To Close Your Limited Company And Pay Just 10% Tax
27 August 2018
Category Business Tips

If you’re looking to close your (solvent) limited company, you may be able to extract the profits whilst paying tax at a rate of just 10%.

A Members’ Voluntary Liquidation (MVL) lets you take the reserved funds in cash, access the money in a matter of weeks and pay less tax.

Why use an MVL?

MVLs can be extremely advantageous, particularly in terms of the potential tax savings that are available.

Very often contractors / freelancers use the MVL process to close down their solvent limited company, typically because they:

  • are taking on a permanent role as an employee (perhaps as a result of IR35)
  • are retiring
  • no longer need the company.

We would always recommend that you speak to your Accountant (if you have one) to decide whether an MVL is the best option for you.

When an MVL is right for you, we will work with you (and your Accountant, as applicable) with our ‘£995 MVL’ service – and help you get the tax advantages available for you.

How do MVLs work?

When a company is closing down, tax usually has to be paid on the amount of profit that’s drawn down as a dividend. This tends to see companies paying capital gains tax at either 18% or 28%.

However, with an MVL, you can often get Entrepreneurs’ Relief and pay capital gains tax at a rate of just 10%.

Who can benefit from an MVL?

To benefit from an MVL and Entrepreneurs’ Relief, your company will:

  • be solvent (i.e. can pay all its bills)
  • (typically) have reserves of more than £25,000
  • have traded for at least 12 months.

Entrepreneurs’ Relief is:

  • available to individuals disposing of shares in a trading company where they were an officer (or employee) holding at least 5% of the voting rights
  • allows relief on lifetime gains up to £10 million

To learn more about our ‘£995 MVL’ service, just get in touch with the MVL team at Clarke Bell.

Get in touch to see how we can help

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If you are worried about your business or just want a (free) no obligation chat, contact Clarke Bell on 0161 907 4044 or [email protected] today. Our Licensed Insolvency Practitioners will provide you with the best professional advice for your situation.

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