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The potential tax charges on the winding-up of a personal service company.
My client operates as a freelance editor through a limited company. He is thinking about retiring and has asked what happens when he stops working. In the past I had advised him that as long as there was no more than £25 000 assets in the company the shareholders could take that as a capital distribution. If there were more they would pay capital gains tax with the possibility of entrepreneurs’ relief. However there is now likely to be nearer £100 000 in the company account.
I have been reading articles that imply that this would all now be treated as an income distribution not capital.
Can Taxation readers advise on what might be done to mitigate liabilities?
Query 18 799– Caxton.
Reply by Chelsea
Distributions made as part of an informal winding up (striking off the register at Companies House without going through...
