Lee Sharpe looks at the tax issues to consider when a property investment company has come to the end of its life.
This article considers the main tax issues that shareholder/directors should consider if they no longer want to run their property business – or at least, not in a company.
Income or capital?
By default, any distribution (ignoring the company’s return of its share capital to its members) is an income distribution (there are other exceptions, but they are available only to trading companies).
Given the current disparity in rates between income tax and capital gains tax (CGT), most people would prefer to have their funds returned to them as a capital transaction. To avoid being treated as dividend income, either: