Accounting Blog

ESC C16 Deadline 1st March 2012

Directors of small businesses who want to wind-up their company and distribute surplus funds to shareholders have just over two weeks to take advantage of a tax break.

Further to our earlier article on the proposed changes we can now confirm the following changes.

The ESC C16 tax concession – whereby money from a wound-up company distributed to shareholders is taxed as capital gains rather than income tax – will be made less generous on 1st March 2012.

Under the enactment of ESC order 2012, passed earlier in February in the House of Commons, the favourable tax treatment will only apply to companies whose total distributions are no more than £25,000.

The £25,000 limit means that for many small businesses the easiest way to ensure that their distributions are still taxed as capital gains will be to enter a formal liquidation. Formal liquidations are expensive and may not be the correct path to take, clients concerned about the changes should contact us for further advice.


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