There may come a time when contracting is no longer right for you. You may have been offered a permanent job, or you may be simply changing careers..

We can help you plan your exit in a tax efficient way. There is an additional fee for the work undertaken in closing your company, however the tax savings far outweigh any fees incurred.

Reserves of less than £25,000
If you have reserves of less than £25,000 then the most tax efficient way of closing your business is to pay a capital distribution and claim Entrepreneurs' Relief.

The alternative would be to pay out an income distribution and pay up to a maximum of 32.5% income tax on your dividends, or 37.5% where your total personal income is greater than £150k in the year.

A 'capital distribution' is a tax beneficial way of distributing company reserves . This is because the first £11,000 of a capital distribution is tax free and the remaining taxed at 10% on the basis that you claim Entrepreneurs' Relief. We will assess your eligibility for claiming Entrepreuners' Relief.

Below is an illustration of the tax saving you would achieve for paying out a capital distribution of £25,000:

Estimated Tax less than £25,000
*This is an illustration only. For a tax calculation based on your circumstances please get in touch. Your tax saving does not factor in fees incurred.

Reserves greater than £25,000
Where your reserves are greater than £25,000, then the only way to pay a capital distribution is to undertake a Members Voluntary Liquidation (MVL) and claim Entrepreuners' Relief. We will assess your eligibility for undertaking an MVL and claiming Entrepreuners' Relief.

A key thing to note is that an Members Voluntary Liquidation (MVL) can only be performed by a licensed practitioner. Dhikr Accountants are not licenced to undertake MVL work. Dhikr Accountants and Frost Group have partnered up to offer our contractors this service for a fee of £850 plus VAT & disbursements. Disbursements vary from client to client and will be determined on a per client basis by the liquidator.

Below is an illustration of the tax saving you would achieve from paying a capital distrubution of £85,000 via an MVL.

Estimated Tax greater than £25,000
*This is an illustration only. For a tax calculation based on your circumstances please get in touch. Your tax saving does not factor in fees incurred.

How we can help?
For clients with reserves of less than £25,000 we can assist you with the end-to-end process including advice on whether you qualify for Entrepreneurs' Relief.

For clients with reserves of more than £25,000, anti-avoidance legislation exists whereby a Members Voluntary Liqudation (MVL) is only permitted where certain conditions are met. We can advise on your eligibility to undertake a MVL and claim entrepreneurs’ relief. We will put you in touch with the Frost Group who will undertake the liquidation for you; we will continue to assist you with all other accounting and tax work required to liquidate your company.

We bring together the technical expertise of a large firm with the feel of a smaller organisation that really cares about your business.

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