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News - Accounting

New ESC C16 legislation affects company closures07/02/2012

Extra Statutory Concession C16 has been available to businesses as a method for companies voluntarily closing to treat distributions of assets to shareholders as capital, rather than income, for personal tax purposes. It has provided company owners with a cheap alternative to using a formal winding up procedure, which HMRC estimates can cost around £7,500, to gain capital treatment for final distributions.

Under the new legislation a cap has been introduced of £25,000 which, if exceeded, all of the distribution will be treated as income and will be taxable at effective rates of 25% and 36.11% for higher rate and additional rate taxpayers.

If you are considering closing your company and have been trading for at least 12 months and intend to cease trading contact us for advice on the most tax efficient way to do so before the new ESC C16 cap comes into effect.

Further information on the changes can be read at

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