Most tax efficient way of closing a Limited company due to lack of new business ?
Posted on January 7, 2009 by admin
mikearscott asked:
Looking to close a contractors company over the next month, it currently has around £15K in it and a corporation tax liability of around £5K at end of May. Can you please give me ideas of minimising the £5K liability, should I be taking a dividend, a high salary – (say £5K) for a month in new tax year (after April 5th), or there is a £9.6K capital extraction available at closing which is tax free apparently. Any advice greatly appreciated.
Looking to close a contractors company over the next month, it currently has around £15K in it and a corporation tax liability of around £5K at end of May. Can you please give me ideas of minimising the £5K liability, should I be taking a dividend, a high salary – (say £5K) for a month in new tax year (after April 5th), or there is a £9.6K capital extraction available at closing which is tax free apparently. Any advice greatly appreciated.
Many thanks
Michael
Sorry to hear your bad news, it is tough out there at the moment.
I am in a similar situation and i have been advised to pay yourself a high salary and pay income tax on that.
Directors dividends come after corporation tax.
Good luck in the future.
The CT due is based on the last accounts, and the liability is fixed. On cessation you can claim any loss against previous year’s profits. Dividends are not tax deductible. talk to your accountant.