Can't Repay Bounce Back Loan? Get Free Advice

Require Immediate Support? Free Director Helpline: 0800 644 6080

Real Business Rescue

Free Director Helpline: 0800 644 6080

Members' Voluntary Liquidation: Tax Considerations


Insolvency Practitioner Approved

What are the tax implications of an MVL?

A Members’ Voluntary Liquidation (MVL) is a tax-efficient way of closing down a solvent company with over £25,000 worth of assets to distribute. Proceeds are taxed as capital distributions rather than income, and you may also be entitled to Business Asset Disposal Relief (formerly Entrepreneurs’ Relief).

60 Second Test Find Your Nearest Office

The Tax Implications for Directors in a Members' Voluntary Liquidation

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.

MVL Tax Advantages

  • During an MVL, any proceeds extracted from the company will be treated as capital distributions rather than income. This means these funds will be taxed much lighter than they would be if they were extracted in the form of dividends outside of an MVL procedure.
  • Since the funds would be subject to Capital Gains Tax instead of Income Tax, shareholders may also be able to take advantage of additional capital reliefs, such as Business Asset Disposal Relief (previously known as Entrepreneurs' Relief), which would reduce the taxes owed even further.

Received a Bounce Back Loan?

Don't Worry - There are thousands of other company directors going through the same process. No matter what position you are in and need looking for options, speak to a member of the Real Business Rescue team. It's Free & Confidential.
The team are available now -  0800 644 6080

Business Asset Disposal Relief and Reduced Capital Gains Tax

If Business Asset Disposal Relief (sometimes known as Entrepreneurs' Relief) is applicable to your situation, it would effectively reduce your Capital Gains Tax from 20% to 10% on any gains up to a lifetime limit of £1 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 and have done so for a minimum of two years. If Business Asset Disposal Relief is not available, an MVL may still provide tax benefits depending on what tax band the individual is in.

If you have any questions about the MVL process or any matter related to closing your limited company, whether it is solvent or insolvent, Real Business Rescue can help. Call our experts to arrange a free consultation at any one of our 100 Offices or a place of your convenience.

Contact the RBR Team Today

Here at Real Business Rescue we take your privacy seriously and will only use your personal information to contact you with regards to your enquiry. We will not use your information for marketing purposes. See PRIVACY POLICY
Free download

Free Insolvency Report

Claim Your Free Business Review

Simply search your Limited Company Name or Company Number

Next Steps

We provide free confidential advice with absolutely no obligation.
Our expert and non-judgemental team are ready to assist directors and stakeholders today.