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Closing UK Company

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We have a company in the UK (that is basically dormant since moving to AUS in Jan).

There is a positive bank balance in the company (enough to be worth not just leaving it there) and wondered what is the best (least tax) way to extract that.

The income in the company has had all UK corp tax paid on it (so it is profit) so wondering what the best way to wind it up and minimise the taxation due in UK and AUS on the disbursement

Will most likely need some actual help doing it but just looking at options right now to work out how to proceed

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5 hours ago, Ausvisitor said:

We have a company in the UK (that is basically dormant since moving to AUS in Jan).

There is a positive bank balance in the company (enough to be worth not just leaving it there) and wondered what is the best (least tax) way to extract that.

The income in the company has had all UK corp tax paid on it (so it is profit) so wondering what the best way to wind it up and minimise the taxation due in UK and AUS on the disbursement

Will most likely need some actual help doing it but just looking at options right now to work out how to proceed

I did a similar thing, as a director of the company we paid my wife a salary for 2 years whilst she was on maternity and working part time hours.

Ended up avoiding all personnel tax but it was a unique set of circumstances i suppose

we used our uk accountant to help close the company from australia.

It is quite a long process to wind up and strike off but not expensive

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6 hours ago, can1983 said:

I did a similar thing, as a director of the company we paid my wife a salary for 2 years whilst she was on maternity and working part time hours.

Ended up avoiding all personnel tax but it was a unique set of circumstances i suppose

we used our uk accountant to help close the company from australia.

It is quite a long process to wind up and strike off but not expensive

Thanks for that.

Does that mean you just kept reporting an accounting loss for those two years as I assume no new revenue was going into the accounts?

That might be an option 

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Another option is to liquidate the company and if you qualify for business asset disposal relief will pay 10% capital gains tax on the profit. There are some costs for this with the liquidator and various disbursements, but can be effective dependent on personal circumstances.

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On 27/07/2022 at 17:26, Ausvisitor said:

Thanks for that.

Does that mean you just kept reporting an accounting loss for those two years as I assume no new revenue was going into the accounts?

That might be an option 

Pretty much yes, im not sure how long you can keep reporting a loss but for us it was only 1 whole financial year for the company because of when we stopped income and when we took last salary.

 

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On 27/07/2022 at 19:33, Road1 said:

Another option is to liquidate the company and if you qualify for business asset disposal relief will pay 10% capital gains tax on the profit. There are some costs for this with the liquidator and various disbursements, but can be effective dependent on personal circumstances.

... but the OP is resident in Australia.

You are talking about the tax position for UK residents.

Best regards.


Managing Director, Go Matilda Visas - www.gomatilda.com

Registered Migration Agent Number 0102534; Registered Tax Agent (Australia)

Chartered Accountant (UK, and Australia)

T - 023 81 66 11 55 (UK) or 03 9935 2929 (Australia)

E - alan.collett@gomatilda.com and acollett@bdhtax.com

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On 27/07/2022 at 05:58, Ausvisitor said:

We have a company in the UK (that is basically dormant since moving to AUS in Jan).

There is a positive bank balance in the company (enough to be worth not just leaving it there) and wondered what is the best (least tax) way to extract that.

The income in the company has had all UK corp tax paid on it (so it is profit) so wondering what the best way to wind it up and minimise the taxation due in UK and AUS on the disbursement

Will most likely need some actual help doing it but just looking at options right now to work out how to proceed

Distributions in the form of dividends or from a liquidator on a winding up are likely to be taxable in Australia as income.

I'd need to look at the accounts and your personal income tax situation to advise and comment more fully.

If you're interested in a freebie chat and a no obligation fee proposal please complete the enquiry form at www.bdhtax.com

Best regards.


Managing Director, Go Matilda Visas - www.gomatilda.com

Registered Migration Agent Number 0102534; Registered Tax Agent (Australia)

Chartered Accountant (UK, and Australia)

T - 023 81 66 11 55 (UK) or 03 9935 2929 (Australia)

E - alan.collett@gomatilda.com and acollett@bdhtax.com

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Curious what did you decide to do in the end and how it worked out?

We are in the same position moving to Australia in Jan/Feb hopefully. I have a job in Australia when I arrive but my wife who is a Director of the company in the UK will not be working in OZ so I am wondering is it better to just keep paying her a salary and and take dividends from the UK company until the account is empty

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14 hours ago, kinse2020 said:

Curious what did you decide to do in the end and how it worked out?

We are in the same position moving to Australia in Jan/Feb hopefully. I have a job in Australia when I arrive but my wife who is a Director of the company in the UK will not be working in OZ so I am wondering is it better to just keep paying her a salary and and take dividends from the UK company until the account is empty

Running a company at a loss where the only P&L activity is the expense of a salary below the tax threshold is definitely one way to get your money out of a company tax free although there there are some issues of legitimacy if it was really your income and not your wife's. Dividends below the tax threshold would work just the same as salary but for that to work tax free your wife would need to be the sole shareholder. Dividend income belongs to the shareholder you can't nominate who is paid.

If any of the shares are in your name you might therefore want to consider registering the transfer of those shares to your wife at companies house before leaving the UK (there's no UK CGT on a gift to your wife). Then your wife can receive the dividends at an annual amount that keeps her below the tax free threshold until the company's cash is exhausted and without any worries about ever having to justify that your wife was earning that salary.


Chartered Accountant (England & Wales); Registered Tax Agent & Fellow of The Tax Institute (Australia) www.kbfayers.com

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Maintaining the UK company involves compliance costs that might be avoided if you simply wind up the company.

And paying a salary when Aus resident is likely to require the set up of a PAYG Withholding registration with the ATO and administration of an Australian payroll  = more compliance costs.

Dividends = yes, maybe.

To give a full and considered answer one would need to know the sums of money involved.    Which I appreciate you might not want to make known on a public forum such as this.

Happy to have a freebie chat - feel able to send an email to me.

Best regards.


Managing Director, Go Matilda Visas - www.gomatilda.com

Registered Migration Agent Number 0102534; Registered Tax Agent (Australia)

Chartered Accountant (UK, and Australia)

T - 023 81 66 11 55 (UK) or 03 9935 2929 (Australia)

E - alan.collett@gomatilda.com and acollett@bdhtax.com

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