This week, I will begin winding up three companies’ tax efficiently that have served their purpose for our customers.
Capital gains tax rates are lower than higher income tax rates on dividends, which means for higher rate taxpayers, there is a tax advantage to closing a company as a capital distribution to the shareholders.
The final reserves must be under £25,000 for a simple winding up. Otherwise, a formal, costly, voluntary liquidation with many more caveats for distributing the final reserves as capital to the shareholders is needed.
Shareholders who will pay higher dividend tax rates on their final dividend before closure and have access to their 24/25 £3,000 capital gains tax allowance and entrepreneurs’ relief should expect to save just over £6,000 by distributing the final £25,000 as a capital distribution.
