Are you a business owner seeking an exit strategy for your profitable company, eager to reap the rewards of your investment? Or perhaps retirement is on the horizon, and you’re considering stepping away from the business?
Members’ Voluntary Liquidations (MVLs) could be the strategic exit tool you’ve been seeking. Join The Solve Co as we delve into the world of MVLs and discover how they can help you maximise returns while minimising tax liabilities.
The Power of Members’ Voluntary Liquidations (MVLs)
MVLs are a go-to solution when a profitable company has fulfilled its mission, and shareholders are eager to reap the rewards of their investment. They also serve as an excellent option for directors approaching retirement or those seeking an exit for various reasons.
One of the standout advantages of MVLs is their potential for substantial tax savings, particularly for shareholders in higher tax brackets. The magic lies in how distributions can be taxed as capital gains tax, a more tax-efficient option compared to income tax. In many instances, shareholders can enjoy a low 10% tax rate on the profits they extract, as opposed to the higher income tax rates of 40% or 45%.
For years, industry experts have whispered about the potential removal of entrepreneur’s relief due to its perceived cost to the government, estimated at £2.4 billion in uncollected revenue annually. Fortunately, entrepreneur’s relief remains intact, allowing The Solve Co to continue assisting clients in maximising their company’s returns through legitimate and significant tax savings.
Navigating the Tax Landscape
Recent developments on the tax front have raised questions about potential reforms to capital gains tax. The Office of Tax Simplification (OTS), a Treasury-based entity, was tasked with exploring ways to streamline this tax and potentially boost tax revenues in light of the economic challenges posed by the Covid-19 crisis. It’s estimated that these reforms could generate an additional £14 billion through measures such as reducing exemptions and doubling tax rates.
While there was a collective sigh of relief on 25 November when no immediate changes were announced, many industry experts believe that adjustments may be inevitable in the near future. With this uncertainty looming, now may be the opportune moment for company owners and managers contemplating changes to consider winding up their business and extracting the fruits of their labour.
Protecting Your Interests with The Solve Co
If you’re looking for expert guidance on protecting your financial interests and making informed decisions regarding your company’s future, The Solve Co is here to help. Our seasoned advisors are available to provide tailored insights and strategies to safeguard your financial well-being.
Don’t hesitate to reach out to one of our advisors at 01823 216156 or drop us an email. We’re dedicated to helping you make the most of your hard-earned profits while navigating the complexities of tax efficiency.
If you’re not quite ready to speak with an advisor, explore our blog for a wealth of free information and advice to empower your financial journey. Your success is our priority, and we’re here to assist you every step of the way.
