UK Tax

UK tax questions? Ask a UK tax advisor for answers ASAP

Ask an Expert,
Get an Answer ASAP!

This answer was rated:

I am a Director of ltd company with 50% of the shares, joint…

Hi I am a...

Hi I am a Director of ltd company with 50% of the shares, joint owner with my business partner. Business hasn't been great for the past 18 months and I am trying to do a rough calculation of how much I could get by leaving the Company. The business has been trading for 14 years and at this stage I am not sure if my business partner will buy me out or if we will just go into voluntary liquidation, and close the business. Just as a ball park figure the current net worth of the business is approx £600k. I wanted to check that I would be eligible for Entrepreneurs Relief rather than having to pay the full rate of capital gains tax on exiting? So roughly £600k shared between joint owners, being £300k less tax at 10% being approx £270k take home. If we close the business in 18/19 What happens if I then end up getting a job during the year - assume this doesn't affect my income tax at all (other than the salary I may have had so far in 17/18)? Thanks Adam

Accountant's Assistant: The Accountant will know how to help. Is there anything else the Accountant should be aware of?

No thanks

Show More
Show Less
Ask Your Own UK Tax Question
Answered in 4 days by:
3/13/2018
Sam
Sam, Accountant
Category: UK Tax
Satisfied Customers: 14,272
Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Capital Gains, CIS ask for Sam Tax
Verified

Hi, Sam here, one of the UK Tax Experts here on Just Answer, Thank you for your question - I shall reply shortly.

Ask Your Own UK Tax Question

Hi Adam

If you sell then in essence you are selling your shares so are eligible for entrepreneurs relief on that sale - and note that capital gains on the shares has no bearing on income tax, which is what employment is taxed on so this will still allow you the gain at 10%

But if you liquidate the company then its not quite as straight forward as you would need to make sure that you released the profits from the business as salary and dividends which then could not be due entrepreneurs relief and would affect your income position - so ideally you would wnat to sell either to your fellow director OR to a new buyer

Thanks

Sam

Ask Your Own UK Tax Question
Customer reply replied 4 months ago
Great, thank you Sam

Hi

You are very welcome

Let me know if I Can assist further, or, if you have all that you need, then please do rate me for the level of service I have provided

Thanks

Sam

Ask Your Own UK Tax Question
Customer reply replied 4 months ago
Hi Sam, thanks for clarifying - I was always under the impression that I could go through members voluntary liquidation, and receive a capital payment as follows: https://www.purnells.co.uk/limited-company/member-voluntary-liquidations/Members-Voluntary-Liquidation-Entrepreneurs-Relief
Can you please confirm this is no longer the case.Thanks Adam

Hi

Capital distributions are liable to income tax not capital gains and Entrepreneurs relief is only allowable on sale of shares (or certain assets)

I personally have never come across this being subject to Capital gains and I do not think this is a valid ay of proceeding - if you look at HMRCs take - it clearly states that the final payout (after liquidation and the bank account frozen) is afinal salary/dividend distribution (as advised originally)

See HMRCs legal advsie on closing a limited company https://www.gov.uk/guidance/corporation-tax-selling-or-closing-your-company

However if you carefully wind up the company rather than liquidate voluntarily (which has more dire consequences and I do not recommend this route) best places you to pay capital gains - so read the information above carefully and find an accountant to handle this properly for you

Thanks

Sam

Ask Your Own UK Tax Question
Customer reply replied 4 months ago
Okay Sam, thanks for clarifying - I will research further. Obviously you can appreciate that this outcome has a fairly substantial impact on the amount I can potentially end up with from exiting the Company, as well as how I approach my business partner when I wish to leave the Company. I am fairly confident he will want to wind things up also if I leave rather than buy me out so I am likely to be looking at quite a bit more tax to pay / less take home if we end up going down this route. My exit plan is in very early stages so just wanted to understand my options / outcome before making any rash decisions or identifying the best time to leave the Company. Maybe I'll approach Purnells (previous Link) and see what they advise.Thanks again
Adam

Hi

Yes of course I fully understand which is why I recommend you having an accountant to manage this process for you so you extract yourself as tax efficiently as possible

I would not use Purnells as I do not belief their exit strategy has any real merit or validity in HMRCs and Company House view point and they state they are (as in one person)Corporate and Personal Recovery - I would use a proper accountant to safeguard yourself under a professional representation that has professional affiliations with legal membership structures which further protects you as an individual

Thanks

Sam

Sam
Sam, Accountant
Category: UK Tax
Satisfied Customers: 14,272
Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Capital Gains, CIS ask for Sam Tax
Verified
Sam and 87 other UK Tax Specialists are ready to help you
Ask your own question now
Was this answer helpful?

How JustAnswer works

step-image
Describe your issueThe assistant will guide you
step-image
Chat 1:1 with an uk tax professionalLicensed Experts are available 24/7
step-image
100% satisfaction guaranteeGet all the answers you need
Ask Sam Your Own Question
Sam
Sam
Sam, Accountant
Category: UK Tax
Satisfied Customers: 14,272
14,272 Satisfied Customers
Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Capital Gains, CIS ask for Sam Tax

Sam is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Sam

Sam

Accountant

14,272 satisfied customers

26 HMRC expertise, PAYE, Self Assessment ,Residency, Capital Gains, CIS ask for Sam Tax

bigduckontax

bigduckontax

Accountant

931 satisfied customers

FCCA FCMA CGMA ACIS

TEAP007

TEAP007

Tax Preparer

759 satisfied customers

Fully Trained Inspector of Taxes / District Inspector/ Team Leader/ Offshore Consultant/ 41 years

Andrew Baker(baktax)

Andrew Baker(baktax)

Personal Tax Adviser

756 satisfied customers

35+ years experience in income tax, CGT, non-residence

berduchwal

berduchwal

Accountant

669 satisfied customers

Qualified accountant and bookkeeper running my own practice since 2008.

Clare

Clare

Solicitor

148 satisfied customers

25 years exeperience as a high street solcitor

Mrs-Tax

Mrs-Tax

Tax Adviser

59 satisfied customers

Law Degree, 19 years in UK Tax.

< Previous | Next >

Related UK Tax Questions
Second opinion] I am a Director of ltd company with 50% of
Second opinion] Hi I am a Director of ltd company with 50% of the shares, joint owner with my business partner. Business hasn't been great for the past 18 months and I am trying to do a rough calculat… read more
bigduckontax
bigduckontax
Accountant
FCCA FCMA CGMA ACIS
931 satisfied customers
I am intending to become involved in a UK ltd (startup)
I am intending to become involved in a UK ltd (startup) company. Let's call it S ltd. I am the sole director of another ltd uk consulting company. Let's call it C ltd. I have options for S ltd, includ… read more
bigduckontax
bigduckontax
Accountant
FCCA FCMA CGMA ACIS
931 satisfied customers
What is the best way in terms of taxation of the 2
What is the best way in terms of taxation for one of the 2 directors of a Ltd Co to sell his shareholding to the other for cash & leave the business which will continue to run. The business has been t… read more
Sam
Sam
Accountant
14,272 satisfied customers
I am setting up a new business and have heard of the option
I am setting up a new business and have heard of the option of setting up an LLP and LTD to work in tandem to maximise tax efficiencies. Is this correct and how would it work with payroll etc? To clar… read more
taxadvisor.uk
taxadvisor.uk
Accountant and Tax Practitioner
Chartered Certified Accountant - FCCA
3,189 satisfied customers
Hello, I run a small business and own 50% of the shares
Hello, I run a small business and own 50% of the shares - my business partner owns the other 50%. We are nearly five years old and turn over approx. 150k after tax for the last two years whilst this y… read more
Sam
Sam
Accountant
14,272 satisfied customers
I received a gain through an employer EMI scheme last year
I received a gain through an employer EMI scheme last year of £40,672. Our company was acquired so all options were sold. Original value - 938 shares @ £1. I have also recently received a final releas… read more
SoftwareVince
SoftwareVince
Senior Accountant
Master's Degree
25 satisfied customers
looking for advice on opening a new limited company and transfering
looking for advice on opening a new limited company and transfering assets etc from old company to the new one. Also have an employee at present company who wants to join me as a director in new compa… read more
SoftwareVince
SoftwareVince
Senior Accountant
Master's Degree
25 satisfied customers
i have a ltd company iam single living with my partner and
i have a ltd company iam single living with my partner and 2 kids ,i own several houses paying me about 45000, my ltd company earns me aprox 65000 ,because of my earning from my houses i only take a s… read more
berduchwal
berduchwal
Accountant
Licenciatura
669 satisfied customers
I intened to close my Ltd company in December 2012, Am i right
I intened to close my Ltd company in December 2012, Am i right in asuming i can take any funds in the company, as entrepreneur payment at 10% tax, I am 65 years old. the sum will be apox, £400-00.… read more
TonyTax
TonyTax
Tax Consultant
High School or GED
8,914 satisfied customers
I have a business that is a partnership (3 partners for tax
I have a business that is a partnership (3 partners for tax purposes) that we want to change to a Ltd Company. The business premsises was also purchased by 2 of the partners ( we use the ground floor)… read more
berduchwal
berduchwal
Accountant
Licenciatura
669 satisfied customers
Can I legally sell my 50% share in our private ltd company
Can I legally sell my 50% share in our private ltd company to the other director for a nominal sum of 1p?… read more
TonyTax
TonyTax
Tax Consultant
High School or GED
8,914 satisfied customers
if I as a company director(no shareholding) am given shares
if I as a company director(no shareholding) am given shares by the current owner as part of an mbo restructure (he is exiting the company for retirement) and then want to exit the company myself, how … read more
TonyTax
TonyTax
Tax Consultant
High School or GED
8,914 satisfied customers
I am purchasing a running business. Family are investing whole
I am purchasing a running business. Family are investing whole amount. Would a loan or an equity interest be better?. If equity what are the capital gains cost on selling - does each euity holder get … read more
CDF Tax
CDF Tax
Bachelor\u0027s Degree
109 satisfied customers
i have received 86,000 cash payment as part of a severance
i have received £86,000 cash payment as part of a severance package with my company. This was for the realease of shares i held within the company (over two years). Could you please advise the tax pos… read more
Sam
Sam
Accountant
14,272 satisfied customers
If a owner of a company loans the company money and repays
If a owner of a company loans the company money and repays himself later is it a drawing and therefore taxable or is it just a loan repaid, and where in the ledgers would you show these transactions… read more
Julie Kingham
Julie Kingham
Director
Chartered Tax Adviser
733 satisfied customers
11 years ago I purchased ,in my personal name, 4 properties
11 years ago I purchased ,in my personal name, 4 properties for £60k each - they are now worth approx £150k each. I would like to sell these assets and use the equity (currently £280k approx) to inves… read more
Sam
Sam
Accountant
14,272 satisfied customers
I have a client who owns a business and wants to gift it to
I have a client who owns a business and wants to gift it to his children. He is 80 years old and owns the business 100% I would like to know what tax implications for CGT and IHT there are if any?… read more
TonyTax
TonyTax
Tax Consultant
High School or GED
8,914 satisfied customers
I am a co-owner of a small business and am concidering selling
I am a co-owner of a small business and am concidering selling my share to my business partner, we have not got a figure set in stone, but i have got a figure of around 350k in mind, we also have got … read more
TEAP007
TEAP007
Tax Preparer
Fully Trained Inspector of Taxes B1
759 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x