Company status

My husband and wife clients traded for many years through a limited company. The business consisted of the husband providing his professional consultancy services assisted by his wife. The business ceased last year but the company remains in existence and has substantial excess profits in the bank.

The clients plan to draw this cash as dividends to supplement their pension income. Assuming that their income does not take them into higher rates in my mind there should be no additional income tax liability. Is that correct? Also is there any hidden corporation tax implication?

For example I assume the company is now an investment company. Does that cause any problem?

Are there problems or more tax-efficient methods of extracting the profits?

Query 18 517 – Worried

Reply from Cythera

I have never really understood why more small limited companies do not do this. Possibly...