If you’re looking to retire and close your limited company, there are a couple of options to consider.
If your limited company is dormant, with no creditors, shareholders or assets, then it may be possible simply to dissolve the company through a Companies House form.
However, it’s much more common for those who are retiring to have trading companies with creditors, shareholders and cash and/or other assets to be distributed. If so, you will want to know the best way for you to take your money out of the limited company and close it down.
Your accountant will be able to advise you on the best course of action. If you have over £25,000 of funds in the company, a Members’ Voluntary Liquidation (MVL) is likely to be your best option. If this is the case, you will need to appoint a Licensed Insolvency Practitioner.
The benefits of a Members’ Voluntary Liquidation (MVL)
Depending upon how much cash there is in your company, using a Members’ Voluntary Liquidation (MVL) could be the most tax-efficient way to close your limited company. It could save you thousands of pounds.
This is because with an MVL the funds to be distributed are subject to Capital Gains Tax, rather than Income Tax. Additionally, if you qualify for Entrepreneur’s Relief (ER) you can benefit from a 10% marginal rate on distributions.
Choosing to go down the MVL route means there can be considerable tax savings for you as the director of the company.
How to start a Members’ Voluntary Liquidation (MVL)
You will need to appoint Licensed Insolvency Practitioner (such as Clarke Bell) for your MVL. Once appointed, it is our aim to make the process as simple and quick as possible – with the distributions to shareholders made after 35 days.
With Clarke Bell, there is no need for face-to-face meetings as the process can be done via phone, email and our Client Portal. (This is available online and enables you to view, upload and store all the necessary documentation relating to your case. You will also receive electronic updates informing you of the progress of the case, including when the shareholders can expect their money.)
You can then head into retirement, safe in the knowledge that your limited company has been closed down in the most legal and tax-effective way for you.