Company Closures

Changes to Entrepreneurs Relief

At RGA, we are always on the look out for opportunities for company directors to close their current company and start a new one. Why? Because of tax saving opportunities of course, which HM Government have made available to you, in the right circumstances, since 2008. How does it work?

If you close down your current company and start a new one, the funds that are left in the company after it ceases to trade and after all third party liabilities have been allowed for are available to the shareholder(s). These funds are treated in effect as the proceeds from the disposal of your shares. They do not need to be regarded as dividends when they are extracted from the company.

However the legislation for entrepreneur’s relief changed in October 2016, backdated to 6 April 2016, and will restrict the above application of entrepreneur’s relief.

In special circumstances entrepreneur’s relief can, continue to apply. For example:-

  • retirement
  • moving to an employment position for at least 2 years
  • a ‘material’ change in the activity of the company

It is when none of these circumstances is applicable that we have to consider how to extract the residue of funds from your current company in the most tax efficient way for you.  It is clear already that it is no longer a question of “one size fits all”. The best approach is based on a variety of issues that may be fairly unique to your situation and can be discussed on an individual basis that would require a meeting.

This advanced discussion could be very helpful if entrepreneur’s relief has any chance of continuing to apply to you.

I would like to express my endorsement of the tax benefits associated with capital gains tax as recommended by Roderick Gunkel & Associates Ltd. The tax benefits available when choosing the capital gains route are very attractive and should not be overlooked. I have reiterated this information to other company directors in the same line of business.

Andy Davison, Director, Bryson Solutions Ltd, Engineering contractors.

Require more information?

If you would like more information or would like to speak to us direct then call us on 01877 331322. Or if you would prefer, ask us a question online.