Following the Chancellor’s budget, in some circumstances,shareholders of close companies can receive a company distribution which is treated as capital rather than dividend income. If Entrepreneur’s Relief is available the gain will be subject to as little as 10{06aeb1921e0b802d2bd9c766bc98fb11cc6a46c2b0593ed9c88a0e29cf417a34} tax.
The Government is therefore concerned that the new dividend tax rates will encourage shareholders to convert to capital what might otherwise be taxed as income.
At THFR we undertake both insolvent and solvent liquidations. A solvent liquidation (Member’s Voluntary Liquidation or MVL) allows a capital distribution subject to certain criteria, notwithstanding the imminent legislative changes.