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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
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Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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I am sole director of ltd company owning 100% of shares. I

Resolved Question:

I am sole director of ltd company owning 100% of shares. I am going to be taking an employment job and the salary will put me into higher rate tax. I have about £25000 in the bank - can I close my company down and take out as entrepreneur’s relief - effectively 25000 less CGT annual exemption 10900 =14100 then pay 10% tax on this - £1410?

Do I have to appoint a liquidator, apply for approval from HMRC or do I just simply file my accounts, pay the tax and then strike my company off via companies house (costs £10).

Some advice on progress would be greatly appreciated.
Submitted: 3 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 3 years ago.
Hello and welcome to the site. Thank you for your question.

You should apply to HMRC to take the final payment as a capital distribution under ESC C16. Once you have approval, than you can distribute all the assets including any cash left in the company's bank account to the shareholders and ensure the company is struck off from the register at Companies House.

Provided you meet all requirements for Entrepreneurs Relief you would qualify for CGT at reduced rate of 10%.

I hope this is helpful and answers your question.


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Customer: replied 3 years ago.

how do I apply to HMRC for ESC 16

Expert:  taxadvisor.uk replied 3 years ago.
Debbie, thank you for your prompt reply.

You should write to the Tax Office dealing with your company's Corporation Tax affairs advising your intention to disolve the company and distribute the cash to shareholders as capital under ESC C16. It can take between 4-6 weeks for the application to be granted.

I hope this is helpful.