If the money coming out of your medical company is £25,000 or less, apply to strike the company off the register and take the distribution before dissolution: Corporation Tax Act 2010 s.1030A treats it as capital rather than income. If it is more than £25,000, use a members' voluntary liquidation, because s.1030A then fails and the whole distribution, not just the excess, is taxed at dividend rates of 10.75%, 35.75% or 39.35% for 2026/27. Through a liquidation the distribution stays capital, and Business Asset Disposal Relief at 18% from 6 April 2026 can apply against a main rate of 24%. Before a liquidation, test the winding-up anti-avoidance rule, clear the director's loan account and file the final accounts.
Strike off or MVL: which route fits?
| Strike off (dissolution) | Members' voluntary liquidation | |
|---|---|---|
| Distribution treated as | Capital, up to £25,000 in total | Capital, with no upper limit |
| Rate if it works, higher rate | CGT: 18% with BADR, 24% without | CGT: 18% with BADR, 24% without |
| Rate if it fails | The whole distribution at 10.75%, 35.75% or 39.35% | The whole distribution at those rates where the TAAR bites |
| Who runs it | The directors, by application to Companies House | A licensed insolvency practitioner |
| Main risk | Going a pound over £25,000, or leaving assets in | The winding-up TAAR, and the cost of the process |
There is no tapering and no allowance on the strike-off route. Section 1030A applies where the company intends to secure payment of sums owed to it and to satisfy its debts, and the distribution, or the total of several, does not exceed £25,000. Exceed it and the section does not apply at all.
One trap sits under s.1030B. Where two years have passed and the company has still not been dissolved, or has not in fact settled what it owed, the distribution is treated as if s.1030A had never applied. A strike-off that stalls because a creditor objects can therefore undo the treatment after the event.
Will the winding-up TAAR turn my capital distribution into income?
It will if you keep doing similar work within two years, and for a doctor that is the normal case rather than the exotic one. ITTOIA 2005 s.396B, inserted by Finance Act 2016 s.35 and applying to distributions made on or after 6 April 2016, taxes a distribution in a winding up as income where four conditions are all met:
- Condition A. You had at least a 5% interest in the company immediately before the winding up.
- Condition B. The company was a close company at some point in the two years ending with the start of the winding up. A medical private-practice company almost always is.
- Condition C. You continue to carry on, or be involved with, the same trade or a similar trade at any time within two years from the date of the distribution.
- Condition D. It is reasonable to assume that the main purpose, or one of the main purposes, of the winding up was the avoidance or reduction of a charge to income tax.
Condition C is where doctors get caught. Close a private-practice company, then take medico-legal instructions or pick up outside-IR35 locum sessions eighteen months later, and the trade has continued. The vehicle makes no difference: a new company, a partnership or plain self-employment all count. Retiring from clinical work, or moving to a substantive NHS post and nothing else, is a different picture.
Where all four are met the distribution is treated as if it were chargeable to income tax, so capital gains treatment is lost and BADR with it: the difference between 18% and 35.75% or 39.35% on the whole sum.
Do I qualify for BADR on the distribution?
Only on a genuine trading company, and only if the conditions held throughout the two years to the disposal. The rate is 18% from 6 April 2026 against a main rate of 24%, so the relief is worth up to 6 percentage points, not the much larger saving the old 10% rate delivered. The lifetime limit is £1m per individual, and on a share disposal you need 5% of ordinary share capital and 5% of voting rights, officer or employee status and a 5% economic entitlement, held throughout.
A company that stopped trading years ago and became a pot of cash and investments is the common failure. For GPs, NHS goodwill cannot be sold, so it never forms part of the value realised. The conditions are on the private-practice disposal page, and if you are exiting a partnership rather than a company the capital account position on retirement is a different calculation again.
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What has to be cleaned up before the company closes?
The director's loan account first. An overdrawn account is a debt owed to the company and so an asset in a liquidation, which the liquidator can call in whatever your own position is. The s.455 charge runs at 35.75% on loans made on or after 6 April 2026 and 33.75% on loans made in 2025/26 or earlier, dated by when the loan was made, and s.458 relief on repayment is deferred to 9 months and 1 day after the end of the period in which you repay. Clearing and redrawing does not work: CTA 2010 s.464ZA, in force from 30 October 2024, matches repayments of £5,000 or more against new payments within 30 days, and against replacement payments where £15,000 or more is outstanding. The mechanics are in the director's loan account guide.
Then the rest of the balance sheet. Employees are paid their final wages and HMRC told you have stopped employing staff. Assets are distributed before dissolution, because anything left goes to the Crown, including refunds that arrive afterwards. Final statutory accounts and a Company Tax Return go to HMRC as the final trading accounts, with corporation tax paid. If you are weighing extraction instead of closing, the options for surplus cash compare the routes, and the annual salary and dividend mix shapes how much is left to distribute at the end.
When should I start, and how does the tax year affect it?
Start roughly a year before you want the company gone, and pick the distribution date deliberately. Three clocks run at once. Companies House will not accept a strike-off application from a company that has traded or sold off stock in the last three months, so the final invoice sets the earliest application date. Corporation tax on the final period is payable 9 months and 1 day after the period end while the CT600 is not due for 12 months, so payment comes first and filing second. And the gain arises in the tax year the distribution is made, so moving it across 5 April moves the gain, the annual exempt amount and the use of your £1m BADR limit into another year.
The two-year TAAR clock runs from the distribution, not the dissolution, so the date you take the money is the date that matters for Condition C. Walk the trading history, the loan account and your intentions for the next two years past an accountant who has closed medical companies before, and do it before any distribution is made, because none of it can be fixed afterwards.