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Where Taxpayers and Advisers Meet

Withdrawing money from limited company bank account

MikeA
Posts: 3
Joined: Sat Sep 26, 2015 8:26 am

Withdrawing money from limited company bank account

Postby MikeA » Sat Sep 26, 2015 8:38 am

I've accumulated a reasonably large sum of money in my business account and wish to withdraw it but it appears that under normal circumstances I have to pay 25% tax on this sum to access it. My question is whether there are any alternatives available to me to legally reduce the tax that, through gritted teeth, it seems I will have to pay. Is liquidating my business and applying for entrepreneurial relief a valid option, bearing in mind, that I would have to set up another limited company to contract through? Are there any other options or am I over a barrel on this one? Any advice gratefully received.

King_Maker
Posts: 6538
Joined: Wed Aug 06, 2008 3:22 pm

Re: Withdrawing money from limited company bank account

Postby King_Maker » Sat Sep 26, 2015 1:01 pm

Dividends and/or salary?

MikeA
Posts: 3
Joined: Sat Sep 26, 2015 8:26 am

Re: Withdrawing money from limited company bank account

Postby MikeA » Sat Sep 26, 2015 2:41 pm

Sorry, am not sure what you mean. The money I wish to withdraw would be dividends, as I take a small salary over the year.

King_Maker
Posts: 6538
Joined: Wed Aug 06, 2008 3:22 pm

Re: Withdrawing money from limited company bank account

Postby King_Maker » Sat Sep 26, 2015 4:01 pm

I had assumed that your reference to 25% tax was to the company charge under section 455 CTA 2010 (loans to participators) - as there is no 25% Income Tax Rate.

However, it seems that you may mean the "effective" tax rate of 25% on dividends for a 40% Income Tax payer?

MikeA
Posts: 3
Joined: Sat Sep 26, 2015 8:26 am

Re: Withdrawing money from limited company bank account

Postby MikeA » Sat Sep 26, 2015 5:02 pm

yes that what I meant. Sorry for not being clearer. The money is retained profit in my business account - if I just withdraw it, i will have to pay an effective rate of 25%, but am wondering if I can reduce the tax on this, maybe through entrepreneurial relief. If I liquidate my company to exploit this, then apparently I won't be able to set up another limited company straight after, as HMRC will look unkindly on doing this. Is this correct? I'm basically desperately looking for options so as not to hand over another vast chunk of cash to the taxman, bearing in mind I've already paid corporation tax on this.


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