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Hi, a couple of years ago I was told that I needed to set up a limited company to do a consulting contract. This was nonsense but I did it anyway as I thought it would be useful. However things didn't go as planned and I now have a dormant limited company with some money in an associated business bank (current) account. I'd like to get the money out of the bank account in the most efficient way possible, all corporation tax has been paid and I send annual micro entity accounts but declare the company as dormant.
As an alternative to taking the money out I'd be happy to move it to a high interest business account but I'm guessing that would need an associated business current account which isn't ideal as my bank is going to freeze my business bank account due to lack of activity (although they currently make a monthly fee from keeping it open....).
The final option I guess is to simply pay myself from the account from a period of time to wind down the balance.
Disappointingly, I can't find a loophole that would allow me to buy a new bike......this would have been a better solution of course.
I'd welcome any real world feedback please. Thank you in advance.
PS: the reason I am asking here is that the amounts involved don't really merit paying a pro (I think!).
Corporation tax may have been paid but if you give yourself a dividend there will probably be dividend tax/income tax on that too. That's what we do/did in a similar situation.
Dividend tax allowance is, currently, £2k pa; use the allowance annually until a/c balance is nil.
If that's not practical due to size of balance or time, consider a director's loan - from business to you - but be aware of possible self-assessment implications.
You - probably - need an accountant and that will cost but will/should keep you hmrc compliant.
Hi, thanks for the feedback. Yes, I can't see a way to twist and turn to get out of the dead end I have put myself in. I think I will look at a way to withdraw the money over a period and still stay below the 40% marginal rate for my total annual income - it would be too galling to effectively pay 60% tax!!
You could liquidate the company if you want to close it. It can be done by an accountant if less than 25K and for >25K it needs a liquidator. There are some restrictions on opening a new company after doing this, but in general you can use your capital gains tax allowance and can pay 10% tax on the remaining amount. It is a tax efficient way of releasing the money in a company if it’s no longer required.