Services
Audit & Assurance
External, internal and joint venture audit services
Business Advisory
Management accounts, strategic planning, profit improvement, ESG
Corporate Finance
M&A advisory, selling a business, fundraising, valuations, due diligence
ESG
Baseline assessments, materiality assessments, carbon footprint and sustainability reporting
Hotel Accounting
Accounting function, automation, daily reconciliations and dashboards, accounts payable
Payroll & Employment
Payroll, global mobility, employee benefits, employment taxes
Private Clients & High Net Worth Individuals
Tax planning & compliance, tax residence and domicile, trust planning
Restructuring & Recovery
Business rescue, liquidations, administrations, insolvency, debt recovery
Tax
Corporate tax, customs duty, VAT, R&D, tax investigations, international tax
Virtual Finance
Bespoke service providing real-time information about your business performance
More from AAB
AAB PEOPLE
Full-service people consultancy – human resources, learning and development
AAB WEALTH
Financial planning, cash flow modelling, retirement planning
AAB Consulting
Business consultancy helping organisations with the challenge of change
Sectors
Business Services
Professional services, medical, recruitment and media
Construction & Property
Property developers, construction companies, housebuilders, landlords
Energy
Renewables, clean energy, energy producers, energy transition, exploration and production
Family Business
Specialist support for businesses owned/managed by families
Food & Drink
Food & drink producers, processors, importers, wholesalers and retailers
Industrial
Engineering, manufacturing, aerospace, automotive, shipping, distribution
Leisure, Retail and Hospitality
Fashion, entertainment, activity centres, hoteliers
Not For Profit
Charities, social housing, higher and further education institutions
Public Sector
Government, non-departmental public bodies, health boards, ALEOS
Technology
Software companies, tech start-ups, cybersecurity firms, and AI innovators.
About
AABout Us
Our story
Our Team
Meet the specialists
Careers
Join the AAB team
Diversity & Inclusion
Building a business where everyone feels they belong
Growing Sustainably - ESG
ESG – Our commitment to building a sustainable business
News
Latest news from across AAB Group
AABIE
AAB charitable initiative
Latest deal boosts AAB Wealth assets under advice beyond £1 billion
Insights
Blogs
Stay informed with cutting-edge news for business growth. Our experts offer industry insights and invaluable advice on accountancy and business strategies.
Case studies
Explore insightful case studies tailored to specific industries, offering invaluable lessons and strategies for success.
Webinars & Events
Engage with dynamic webinars and events tailored to your interests, offering valuable insights and networking opportunities.
ESG Diligence: The Key To Sustainable M&A Transactions
AAB / Blog / Winding up your business? Watch out for the new rules.
BLOG19th Feb 2016
The way in which you’re taxed when a company is sold or wound up is about to change. In this blog article we outline the implications.
April 2016 may herald a shock for business owners, as we’re going to see an increase in potential tax liabilities. Normally, directors will pay themselves a salary, benefit from dividends and then take a capital lump sum at such point that the business is wound up or sold.
Currently, on the sale of shares in a trading company – or where a trading company is wound up – Capital Gains Tax (CGT) would usually be payable on any monies paid out to the shareholders, at rates of 18% or 28%. There has always been the possibility, however, of claiming Entrepreneurs Relief if the company activity could be regarded as a trade and other relevant conditions are met. A successful claim can result in your liability being reduced to 10%.
A consultation was launched at the end of last year about a number of changes which could end up having a big impact. In the event of a company being involved in a ‘Winding-Up’ (which appears to include both a Striking Off or Members Voluntary Liquidation (MVL)), the Revenue is recommending that distributions will be charged to Income Tax rather than CGT when certain conditions are met. Where total income falls into the higher-rate tax bands, those rates could be 32.5% and/or 38.1%.
HMRC indicate that these proposals are being aimed at situations such as:
Where a shareholder is aware that a sale of the company’s shares is imminent they may arrange to retain profits within the company for a period before sale (eg they may reduce their normal levels of salary and dividends with the intention of receiving a higher amount of sale proceeds).
Where a company has retained profits in excess of its commercial requirements, often being with a view to the shareholders subsequently receiving the retained profits as a capital amount, when the company is eventually wound up/liquidated.
Where one company has built up retained value from its trading activities but is then liquidated, with a capital sum being received by the shareholders and a new company is set up to carry those similar – or substantially the same – activities. The shareholders benefit from the receipt of a capital sum and are also able to carry on their existing trade.
Where the company in question was just one of a number of companies, between which the activities of a single business were divided, with each of them undertaking a specific part or project. As each specific part/project is completed the relevant company could then be wound up and the profits realised as capital rather than income. In particular, HMRC intend to introduce a Targeted Anti-Avoidance Rule which would apply to certain distributions from a Winding-up and result in them being taxed as income. The rule will apply where:
As the consultation period recently came to an end in early February 2016, it will be important to keep in close contact with your professional advisers to monitor developments and find out how the changes may affect you and your business.