Budget 2016: treatment of capital gains

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    Budget 2016: treatment of capital gains

    There is one policy under consideration that the budget did not address yet, which is the potential changes to how distributions from a corporate can or cannot be treated as capital distributions. As I understand it, if you wind up a company and distribute any remaining assets, it is currently possible to apply to have this distribution treated as a capital distribution and thus subject to CGT for the individual shareholder. Given that George has just reduced the basic and higher rates for CGT, this is quite an impact. But only if they don't change the rules on treating that king of distribution as capital.

    For those considering holding BTL in a corporate vehicle, this could be a considerable different in long term value...

    #2
    I am not an accountant, but my understanding is that:
    - BTL corporate vehicle, considered an "investment company", not a "trading company".
    If you wind up a "trading company", you pay with the entrepreneur tax relief only 10%, if you have been shareholder and director for at least 3 year.
    If you wind up a "investment company", it would have seen as distribution of dividend, and tax accordingly.

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      #3
      The approach I'm referring to has nothing to do with Entrepreneurs Relief. It is merely an approach that allows a distribution on winding up to be treated as a capital distribution and thus subject to CGT.

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        #4
        Got it, I was not aware.

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