We explain closing a limited company in plain English, handle it correctly, and make sure you claim every relief you are entitled to, all at a fixed fee.
Closing a Limited Company
There are two main ways to close a solvent limited company, a simple strike-off, or a Members' Voluntary Liquidation (MVL), and which you choose has a big effect on the tax you pay on the money left in the company.
We advise on the most tax-efficient way to close your company, handle the process, and where you have significant retained profits, use an MVL so you can extract them as capital, often with Business Asset Disposal Relief, rather than as dividends.
Where a company has significant retained reserves, an MVL lets you take them as capital gains, potentially with Business Asset Disposal Relief at a lower rate, which is often far more efficient than a strike-off where large reserves would be taxed as dividends.
The Detail That Matters
There are two main ways to close a solvent company, a simple strike-off or a Members' Voluntary Liquidation, and which you choose has a big effect on the tax on the money left inside. For larger reserves, the difference can be substantial.
A strike-off is simple and cheap, and where retained reserves are modest (broadly up to £25,000), they can be distributed and taxed as capital gains, potentially with Business Asset Disposal Relief, rather than as dividends.
Where reserves are significant, a Members' Voluntary Liquidation lets you extract them as capital gains, taxed at CGT rates (potentially the BADR rate) rather than dividend rates of up to 39.35%, often a large saving.
On a qualifying closure, BADR can apply a reduced CGT rate on up to £1m of lifetime gains, making capital treatment far more efficient than taking large reserves as dividends.
We deal with any overdrawn or credit director's loan account, the final accounts and Corporation Tax return, and the striking-off or liquidation process, so the company closes cleanly.
Closing a company the wrong way, striking off when reserves are large, can mean paying dividend tax of up to 39.35% on money that an MVL would have taxed as a capital gain at a much lower rate.
Key Figures
How We Help
We advise which closure route is right, a simple strike-off for small reserves, or an MVL where larger reserves make capital treatment worthwhile.
An MVL can let you extract reserves as capital gains, potentially with Business Asset Disposal Relief, far more efficient than dividends for larger sums.
We handle the closure, final accounts and tax returns, and the interaction with any director's loan account, so it is done cleanly.
All the forms, calculations and correspondence handled on your behalf, so you never have to decode HMRC's rules or sit on hold.
A clear fixed fee quoted after a free call, your position explained in plain English, and never a surprise bill.
We act quickly, and where earlier years are involved we put those right too, reclaiming refunds or minimising penalties.
Closing a company the wrong way can mean paying dividend tax on reserves that could have been taken as lower-taxed capital gains. Choosing the right route, and using BADR where it applies, is where the saving is.
Recent Client Outcome
A contractor winding up their company had significant retained profits and was about to strike it off, which would have taxed the reserves as dividends.
What we did. We used a Members' Voluntary Liquidation so the reserves were treated as a capital gain, and claimed Business Asset Disposal Relief on the qualifying amount.
The outcome. The reserves were extracted at a much lower effective rate than dividend tax would have applied, saving a substantial sum against a strike-off.
Choosing the right closure route, and using BADR, protected a large part of the company's accumulated profits.
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