I've carried out quite a bit of research into entrepreneur relief and I think it's a viable medium term option. My understanding is I'd incur:
(a) 12.5% corporation tax when retaining profits in the company
(b) Professional services surcharge of 15% on 50% of my undistributed income (as I have a closed company) of 0.15*0.5*(1-.125) =6.56%. The 12.5% reduction is due to the surcharge being levied on post-tax profits.
(c) So I incur 19% tax when retaining in the company i.e. I'm left with 81% of my original cash.
(d) When I liquidate the company (after 3 years) I'm charged 10% CGT i.e.81%*90% = 72.9% (or 72.84% is the exact calculation)
So I've effectively paid a 28% tax on profits instead of withdrawing them at a 52% effective tax rate. I know I'll have to pay liquidator fees of €3k-€5k + VAT but am I missing anything else?
(I have been contributing heavily to my pension but I'd like to take cash in hand to repay my mortgage. I'm also concerned that the minimum age you can withdraw an executive pension will be raised from 50 to 60+by the time I retire, I'm now 35. The UK's min age will increase from 55 to 57 by 2028 and we'll follow suit I'm sure.)
(a) 12.5% corporation tax when retaining profits in the company
(b) Professional services surcharge of 15% on 50% of my undistributed income (as I have a closed company) of 0.15*0.5*(1-.125) =6.56%. The 12.5% reduction is due to the surcharge being levied on post-tax profits.
(c) So I incur 19% tax when retaining in the company i.e. I'm left with 81% of my original cash.
(d) When I liquidate the company (after 3 years) I'm charged 10% CGT i.e.81%*90% = 72.9% (or 72.84% is the exact calculation)
So I've effectively paid a 28% tax on profits instead of withdrawing them at a 52% effective tax rate. I know I'll have to pay liquidator fees of €3k-€5k + VAT but am I missing anything else?
(I have been contributing heavily to my pension but I'd like to take cash in hand to repay my mortgage. I'm also concerned that the minimum age you can withdraw an executive pension will be raised from 50 to 60+by the time I retire, I'm now 35. The UK's min age will increase from 55 to 57 by 2028 and we'll follow suit I'm sure.)