Planning to use Retirement Relief to clear €370k interest-only mortgage due in 8 years

A couple of related things/questions:
1. If you keep the money in the company apart from the non-availability of a tax free lump sum, drawing it as dividends in the future is similar to taking income from a pension? So taking a lump sum from a pension to pay part of the mortgage might be reasonable and taking dividends from the company over time to offset the pension income fall might be a plan.
2. Do Irish Revenue have any way of stopping someone building up retained profits in a small company other than the application of the close company surcharge (the scope of which seems to have narrowed based on a recent appeals' decision)?
3. If you liquidate the company and retirement relief doesn't apply you are taxed at CGT rates which, currently at least, are lower that tax+USC+PRSI?
 
Thanks, definitely an eye opener and going to get the advice we need, one more question should we going to a financial planner or a tax consultant.
All advice is greatly appreciated.
 
JamesBM said:
3. If you liquidate the company and retirement relief doesn't apply you are taxed at CGT rates which, currently at least, are lower that tax+USC+PRSI?
Click to expand...

Well you pay Corporation Tax on the profits at 12.5%. Then you pay CGT at 33% on the retained profits.
So while that is a lower rate than the top rate of personal taxes, you are putting the money out of your personal use for a long time for a relatively small saving.

Take profits out as salary or as pension.
If you want to do something different, make sure to have a detailed written justification from a good tax advisor where the advantage is not just marginal, but overwhelming. Don't leave money in the company based on a bit of DIY internet research.

Brendan
 
One other thought on this is whether you could avail of Entrepreneur's Relief if you liquidated the company. You appear to meet the conditions and your shares in the company would be the qualifying asset?

Revised Entrepreneur Relief

A description as to what the Revised Entrepreneur Relief is
www.revenue.ie www.revenue.ie
 
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