Closing a small business - access to money.

sparetomato

Just prior to Coronavirus hitting, I had the opportunity to go back to being Employed from being Self-Employed.
I was not sure if I wanted to be employed, but given the way Covid is decimated my previous sector and falling through the cracks of Mr. Sunak's "Support" package I fell lucky. The fact that I quite enjoy this job, I can't see myself going back self-employed for a while, if ever.
My old business still has c£20K cash in it, that I would like to withdraw in the most tax-efficient way possible. Prior to the Dividend tax, this was easy, but I really don't fancy paying Tax on £20K if I can avoid it.
I know I could withdraw £2K a year for the next 10 years (assuming the threshold remains the same... which I don't think it will) and just keep the company dormant, but is there another way?

Savvy_Sue

Just checking: was this a Limited Company? If it was, did you have an accountant? Their advice would be invaluable because they know you and your business ... 

macman

It's hardly going to be cost-effective to keep the company going and having to maintain, submit (and pay for) returns every year just to save a one-off tax bill. You might however want to split it across 2 tax years, given the approaching date of 6/4/21?

Pennywise

As it's under £25k, you could do a informal striking off and then the £20k would be "capital" and subject to capital gains tax instead of income tax, whereby the first £12k or so is tax free as covered by the CGT annual exemption.  That means just £8k of the £20k is taxable, probably at just 10%, so only £800 tax on £20k, not a bad result - 4%!  You just need to do the formalities correctly, for which I'm sure your accountant can help.

DoctorStrange

If your current earnings are less than £42k, you could take £10k as a dividend, of which £2k is taxed at 0% and you'd pay 7.5% on the remaining £8k (£600). 

Then the remaining £10k could be realised via the process Pennywise mentions