I have a LTD company in the UK, my accountant, like many accountants are not specialist in some topics. my question is; is there another way, which is tax efficient to extract around £250,000+ from my company in one go?
Otherwise, am I correct in believing that i could be facing 42% charge on the dividend?
I have not taken any dividends from the company before, and only pay myself the min amount (£8100 yr)
I'm sure I have seen a company advertising that it could reduce the dividend tax for me?
I know im not taking these funds out in the best manor, but dont have a choice, so need to reduce the tax I pay on the withdrawal.
Hi.I'm not aware of any way of taking a dividend out of a company which is described in the company's records as such and avoiding the tax consequences. If you take a dividend of £250,000 in cash, that grosses up to £277,778. You will pay tax at 22.5% on about £115,630 (32.5% -10% tax credit) and at 32.5% on about £127,778 (42.5% - 10% tax credit). The balance of £42,475 is taxable at 10% and that liability is covered by the 10% tax credit. The only thing I can think of that you may have read about where you can take money out of a company as capital as opposed to income is where you close the company down under what was ESC C16 in an informal liquidation. However, this is now limited to £25,000 and so is not much use to you. In order to take out more than £25,000 as capital, you would need to go through an expensive formal liquidation and you would still have a potential Capital Gains Tax liability to pay, albeit at 10% if you qualify for entrepreneurs' relief. If you borrow the money from your company and are effectively overdrawn which for a director is not good, the tax office will issue a Section 419 tax charge at 25% of the money borrowed. That tax charge will be repaid after the loan has been repaid. Again, that may not be an option for you if you will find it difficult to repay the money from your own resources or by voting dividends.If you have a spouse who can be made a shareholder, that could reduce the higher rate tax exposure. Again, that may not be appropriate in your circumstances.Finally, if the company owes you money, you could withdraw that with no tax consequences.Let me know if you have any further queries.