Winding Up Solvent Companies

From today, 1 March 2012, it will no longer be as cheap to wind up solvent companies where the net assets total more than £25,000.

Up to now, companies could be wound up simply and cheaply and the net assets, whatever the value, could be distributed to the shareholders and be subject to capital gains tax rather than income tax. In may cases, Entrepreneur’s Relief would be availble meaning that the net assets of the company could be distributed to the shareholders subject only to a tax rate of 10% (rather than an effective tax rate of 22.5% or 32.5%, depending on your level of total income).

From now on, if the net assets of the company on cessation exceed £25,000 and you want to receive this money subject to capital gains tax at an effective tax rate of just 10%, the company will need to appoint a formal liquidator. This could cost anything from £1,500 to £5,000 plus VAT.

For more information, do please call us.