What are the Advantages of an MVL?
- A tax efficient way for getting money back to shareholders
- All the affairs of the company are correctly wound up
- All creditors are paid in full
- Shareholders can benefit from Entrepreneurs Relief
In order to gain access to the money held in your company in a tax efficient manner it is necessary for the company to be put into members voluntary liquidation (MVL). This is because only a liquidator can distribute the funds as capital rather than income and capital receipts tend to be taxed at a more favourable rate than income. So long as the shareholders qualify for Entrepreneur’s Relief this tax rate is currently 10%.
Lines Henry are Licensed Insolvency Practitioners and we offer:-
Lines Henry Limited are members of the Insolvency Practitioners Association and comply with their Code of Ethics. We are also members of the Association of Business Recovery Professionals
We find that MVLs are suitable where funds held exceed £50,000 and you have used up all relevant allowances such as pension payments. If the funds held are below £25,000 the company’s accountant may be able to deal with the winding up of the affairs of the company and still give the money held to shareholders as a capital receipt. If the money retained is between £25,000 and £50,000 careful consideration has to be given to how the money is distributed to ensure that any tax saved is not less than the costs of winding up.
We recommend that you talk to your accountant or tax adviser first. Whoever deals with your personal tax affairs needs to be involved as ultimately you need advice on the rules about Entrepreneur’s Relief.
For further information telephone Lines Henry on free phone 0800 012 6649
(*if VAT registered this is usually reclaimable)