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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4194
Experience:  FCCA FCMA CGMA ACIS
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I'm wanting some tax advice as a small business owner, but

Resolved Question:

I'm wanting some tax advice as a small business owner, but not sure how this site works- is advice payable ?
Submitted: 1 year ago.
Category: Tax
Customer: replied 1 year ago.
I am thinking of selling my business and have approx £90k brought forward profits. I am wanting to know the best way to take this profit out of the business from a tax perspective. I currently pay myself through the business £11,000 through PaYE to get my tax free allowance and then dividends up to the max befor higher rate tax applies.
I don't seem to get solid advice from my own accountants as they say this is not their area of expertise- I currently use Tax Assist who are a franchise, so I would have to get involved with their head office experts at cost.
I hope you can give me some advice as to the best way forward.
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. Is you business run through a limited company? Once I know this I can address the situation more fully,.
Customer: replied 1 year ago.
Yes it is a limited company - thank you for your swift response :-)
Expert:  bigduckontax replied 1 year ago.
Keep on taking moneys as you are now up to your personal allowance limit, ditto for the dividends, remember the first 5K of these are tax free. Thereafter it will be taxed at your marginal rate. Once the company's funds are exhausted then sell the company off through, for example, eBay. Yu are unlikely to be liable for Capital Gains Tax (CGT) on such a sale as the savings will be modest. Please be so kind as to rate me before you leave the Just Answer site.
Customer: replied 1 year ago.
But the company is still in operation and will be up until the sale of the business,( to be continued by the new owner) so I won't be able to exhaust the funds. Can you advise the most tax efficient way of taking out the £90k profit please.
Expert:  bigduckontax replied 1 year ago.
OK, well there are two possible routes. You could pay your spouse to run off the 90K or part of it. Alternatively you could seek to include it as an asset in the sale price. However, a private company is only worth what a buyer is prepared to pay for it so it is possible you may not achieve this. or only in part.
Customer: replied 1 year ago.
I haven't got a spouse. The company is currently up for sale based on the EBITDA, so the brought forward profit is not included in the sale. Can you please advise what tax I would have to pay to withdraw the profit?
Expert:  bigduckontax replied 1 year ago.
Oh dear, well it was a possible route. If you withdrew the profits now on the assumption that you have exhausted your basic rate band would be 90K @ 40% = 36K. However, your total income would exceed 100K so you would loose your personal allowance at a rate of 1 pound for every 2 quid over; in fact you would loose the whole of it leaving you with an added 4.4K bill. I am so sorry to have to rain on your parade.
Customer: replied 1 year ago.
Thank you - that answers the question for me
Expert:  bigduckontax replied 1 year ago.
Please don't forget my rating.
bigduckontax and 2 other Tax Specialists are ready to help you
Expert:  bigduckontax replied 1 year ago.
Thank you for your support.