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bigduckontax
bigduckontax, Accountant
Category: Tax
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A company is being dissolved where there is £50000 cash, this

Resolved Question:

A company is being dissolved where there is £50000 cash, this is to be distributed to the sole shareholder who has deceased, what are the tax consequences?
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. I assume that any Corporation Tax (CT) pursuant to the company's trading activities has been paid. If not, then the CT must come out of the 50K. Otherwise it is available for distribution to the shareholder. There is no deduction of tax involved. As that person is deceased it must be rendered to his executors or administrators. It will then have to be included in the deceased's assets for Inheritance Tax (IHT) purposes. IHT kicks in at 325K and is at a flat rate of 40%. I suspect that you may be worried about Capital Gains Tax (CGT). There is no CGT on death, all assets being aggregated and taxed as I told you in the previous paragraph. I do hope that I have shed some light on the position.
Customer: replied 1 year ago.
I had read that on dissolution only £25k could be distributed with the remainder as dividend
Expert:  bigduckontax replied 1 year ago.
You are correct, but in this case the answer is a lemon as the only shareholder is deceased. Normally, an insolvency practitioner, who must be employed to dissolve the company, would treat anything over 25K as a capital gain, but as there is no CGT on decease then the full sum would be available to the executor or administrators.
Customer: replied 1 year ago.
It is the Solicitors doing a dissolution, so they may not treat it as capital gain would this be a problem as a dividend into the estate
Expert:  bigduckontax replied 1 year ago.
Only a licenced insolvency practitioner may dissolve a company. If the firm of solicitors being employed are not so designated then they cannot act in the dissolution. In any event they must treat anything over 25K as a capital gain and cannot go down the dividend road.
bigduckontax and other Tax Specialists are ready to help you
Customer: replied 1 year ago.
That's great thank you for your help
Expert:  bigduckontax replied 1 year ago.
Thank you for your support. Delighted to have been able to be of assistance.