Dividend checklist
When you want to pay a dividend, there are a number of considerations to take into account to ensure it is valid. Our checklist will help you to establish that your dividends are up to scratch.
-
Free childcare for company owners?
You’re an owner manager and your daughter is due to start nursery. You understand that working parents can get free childcare but a friend said this isn’t available if you only pay yourself dividends. Is this true and what can you do to qualify?
-
CT61
-
Getting the NI on benefits right
Getting the National Insurance (NI) treatment of employee benefits wrong remains a common issue for employers, particularly where the benefits are payrolled. Errors can lead to underpaid NI and potential compliance action. What should you check?
Dividends
Dividends are amounts paid to shareholders out of the accumulated profits of a company. Generally speaking, these will be paid out in direct proportion to the number of shares held in the same class - so a shareholder who has 200 shares would receive twice as much as one who has 100 shares. There can be differences due to shareholders waiving their right to dividends. The dividend is therefore a return on capital, i.e. it is a type of investment income and not earnings for tax purposes.
There are a number of things that need to be considered in practical terms when paying dividends, so we have put these together in a checklist.
Using the checklist
Refer to the checklist ahead of deciding on dividend levels, and ensure you follow each step. Provided you do this there should be no issues with your dividends being queried. You will also have all the paperwork to hand with the correct accounting entries in place.
This website uses both its own and third-party cookies to analyze our services and navigation on our website in order to improve its contents (analytical purposes: measure visits and sources of web traffic). The legal basis is the consent of the user, except in the case of basic cookies, which are essential to navigate this website.