Have Tax Questions? Ask a Tax Expert for Answers ASAP
If you went through a formal liquidation, you should be able to withdraw the £150,000 as a capital payment, split between you and your wife in proportion to your shareholdings. You would then disclose the payment as a capital gain and claim entrepreneurs' relief. Assuming you qualified for ER, you and your wife would pay Capital Gains Tax at 10%. If you set up the company from scratch, then the cost of your shares will be very low so the gains for each of you and your wife will be 100% of the cash. Any other method of withdrawal would leave the payments subject to income tax on dividends and income tax and national insurance contributions (on salary).
Take a look here and here for more information.
I hope this helps but let me know if you have any further questions.
Many thanks for your assistance.
Just to be clear, if we liquidated the company and paid the 10% corporation tax, the amount paid to us would not be subject to further taxation. for example say my share was £75,000 after corporation tax the taxman could not deduct any further tax and the amount would be net.
Apologies is this seems a silly question.
It's not corporation tax, it's personal capital gains tax. It would be the same if you sold your company shares and made a capital gain. The difference is you are looking ti liquidate the company and taking the cash out as a capital payment as opposed to a dividend or salary payment.
If you qualify for ER, the CGT will be the extent of your tax liability.