Companies in good financial standing can use a members voluntary liquidation (MVL) to efficiently wind up the affairs of a company and realise its assets into a cash amount that can be divided up amongst shareholders.
If entrepreneur's relief is available to your company it would effectively reduce your Capital Gains Tax from 18% to 10% on any gains up to £10 million. This relief is available to individuals who are disposing of the shares of a trading or holding company or group in which they hold 5% or more of the voting rights. If entrepreneur's relief is not available an MVL may still provide tax benefits depending on what tax band the individual is in.
George Osbourne's Emergency Budget 2010 raised Capital Gains Taxes, so in some cases there may not be tax advantages associated with members voluntary liquidation. Whether you'll save on taxes through an MVL will depend on several factors, including whether you're eligible for entrepreneur's relief, the Capital Gains Tax base cost of your company's shares, and the taxpayers marginal tax rate.
If you have any questions about the tax benefits of members voluntary liquidation or any other matter related to business insolvency and recovery, feel free to send us an email about your case for free confidential advice. You can also reach our director's support line on 0800 644 6080. Real Business Rescue provide director advice online, over the phone, or in-person at one of our 55 UK offices or a place of your convenience.
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