tax on winding up ltd company

tms88_user

My retired parents are looking to wind up their limited company that they own together with one other. My Mother 25% owner, Father 25% and A N Other 50% owner. All are agreed that if anyone wants to sell and wind up then they will do.

I am trying to get a rough handle on tax implications so they can determine if it really makes sense. I was wondering if anyone could help sanity check the below.....

The company owns 1 property that it rents out, that property was purchased by the company many years ago for 115k , Sale price expected to be 300k so a profit of 185k.

If we assume it will be sold this tax year then the limited company would pay corporation tax (19%) on the 185k realised profit so approx 35K. This would leave £265k (300k - 35k)

I appreciate that there are changes in the next tax year - thats one of the reasons they are looking to just get rid - that plus the admin and the want for the money of course!

For now I am going to keep it simple and ignore all the fee's of selling, liquidator fee's etc. 

I believe that the company can be liquidated and would likely be done using a liquidator as part of an MVL (Members voluntary liquidation) doing this would result in the cash in the company as being able to be treated as CGT and based on business asset disposal relief that CGT would be 10%.

So after the sale....
Company holdings: 265k

25% Owner 1: 66.25 (less 10% so 6.6k) take home is roughy 59k

25% Owner 2: 66.25 (less 10% so 6.6k) take home is roughy 59k

50% Owner 3: 132.5 (less 10% so appox 13k) take home is roughy 119k

I appreciate that there would be some annual tax allowance and that the moneys could be staggerred potentially over the tax years (and that CGT rates are changing!) but lets forget that for now.

They could take the money and would have no income tax to concern themselves with as this is not treated as income.

Does anyone know if the above rough calculations on take home is about right (probably!) or am I missing something 

I appreciate that when it comes to it they will need to get some proper advice! but all comments, advice and prior experience would be massively appreciated

Jeremy535897

The shares in the company will not qualify for business asset disposal relief because the company does not trade. See:
https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet

Assuming that the taxpayers are higher rate taxpayers already, all of the gains would be taxed at 20% rather than 10%. That is still better than the higher rate of dividend tax, currently 33.75%.

tms88_user

Thanks that link suggests it is relevant of it is your main residence so not sure it is Apt.

Will check on business asset disposal relief as I was informed that it would be relevant 

Jeremy535897

My apologies. The correct link is:
https://www.gov.uk/government/publications/entrepreneurs-relief-hs275-self-assessment-helpsheet/hs275-business-asset-disposal-relief-2021