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Second opinion] I am a Director of ltd company with 50% of…

Second opinion] Hi I am...
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 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 AdamJA: The Accountant will know how to help. Is there anything else the Accountant should be aware of?Customer: no thanks
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3/14/2018
bigduckontax
bigduckontax, Accountant
Category: UK Tax
Satisfied Customers: 4,965
Experience: FCCA FCMA CGMA ACIS
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Hello Adam, I am one of the experts on Just Answer and pleased to be able to help you with your question.

Yes, Entrepreneurs' Relief (ER) would be available if you are going out of the business altogether. This limits Capital Gains Tax (CGT) to a flat tare of 10%. Getting a job would not affect that in the slightest as your wages would be subject to Income Tax (IT), not CGT. Changing jobs is effected tax wise seamlessly through the P45 procedure.

I do hope that you have found my reply of assistance.

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Customer reply replied 1 month ago
HiCustomer- thanks very much from coming back to me with your advise. Can you please just clarify that ER is available in both cases, 1 - if I were to sell the shares in the business to my business partner, and also 2 - if we were to close the company and go in to Voluntary liquidation?I was previously told that if we went in to voluntary liquidation that the final payment from the liquidators to myself could be classified as wages / dividends rather than capital gains?Obviously there is a substantial different in terms of my net take home and I'm just trying to clarify before settling on an exit strategy if business performance doesn't turn around in the near future.Thanks again duck, much appreciated
Adam

! & 2, Yes, ER would be available, Adam.

Not so, if the company was liquidated you would be going out of business and CGT liability could arise and ER apply. By the by, don't do that, just sell it off on eBay where there is a ready market for second hand companies and you might be surprised at the sort of money you could get for it! Much less hassle that closing down these days.

Please be so kind as to rate me before you leave the Just Answer site.

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Customer reply replied 1 month ago
Thanks big duckontax, so just to be clear, if we go in to liquidation no ER, but if we do a members voluntary liquidation (MVL) then all okay and we will definitely qualify for ER paying just 10% on the final balances we take from the company - is that correct? & Wow selling the company on eBay, that sounds crazy but I like it - especially if it attracts further funds on top of the net worth that is currently in the company... I never would have thought it - I guess we just have to ensure our names are ***** ***** from the Company in case they do something dodgy with it once they have purchased the Company?Thanks big duck, you've been great. many thanks indeed
Adam

If you go into liquidation insolvent then there will be no gain! Voluntary liquidation, yes.

I sold a bog standard company for friends on eBay and they got 500 quid for it from a man desperate for a company with a long period of trading record. I see it is still operating in Hatton Garden. All the resignations of Directors and Secretaries etc were properly filed on sale.

Please don't forget my rating.

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