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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 16670
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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Second opinion] I am closing my business and starting an

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second opinion] I am closing my business and starting an on-line business. My current business has no assets creditors or debtors but there is over 60k in the BankI was going to strike the Company off through HMRC costing £10, but my accountant has advised as there is over £25k in the Bank I have to go through liquidation which costs thousands is this correct

Hi. My name is*****'m looking at your question now and will post my answer or ask for more information here in a short while.

You only have to go through a formal liquidation if you wish to withdraw the cash as a capital payment, claim entrepreneurs' relief and pay CGT at 10%.

If you don't go through a formal liquidation, you will have to withdraw the cash as a dividend to the extent that it represents undistributed profits. Whilst you may pay some income tax at 7.5% on some of the dividend, some will be taxed at 32.5% if your total income exceeds £50,000 in the current tax year.

Take a look here for more information.

An alternative would be leave the cash in the company and draw it out over a longer period so as to minimise the income tax liability.

I hope this helps but let me know if you have any further questions.

Customer: replied 4 months ago.
Very helpful
Thank you

Thanks.

Would you mind rating my answer before you leave the site please.

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