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Amount of dividend versus profits

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    Amount of dividend versus profits

    Hi. Hopefully a very simple question, and a simple answer.

    The amount of a dividend doesn't bear any relation to the profits for the year, I assume?

    Example, the company bank has 20k, accumulated from profits over some years. This year, the profits were 5k. I choose to pay a dividend of 10k. This is all fine, correct, as long as the dividend is declared correctly on the personal tax return?

    Thanks.

    #2
    Yes, it's fine.

    Comment


      #3
      Thanks.

      And just to add one more scenario... this year I paid myself less than normal, only around half of the usual 8.5k. I assume it's OK to take a higher dividend to take me up to the personal allowance limit (12.5k + 2k tax free dividend allowance)?

      Comment


        #4
        Just make sure you have enough sitting in the business to pay VAT & Corporation Tax for the year. Don't take out more than you'll need to pay your bills.
        …Maybe we ain’t that young anymore

        Comment


          #5
          Originally posted by WTFH View Post
          Just make sure you have enough sitting in the business to pay VAT & Corporation Tax for the year. Don't take out more than you'll need to pay your bills.
          Because they aren't profits, just for clarity.
          'CUK forum personality of 2011 - Winner - Yes really!!!!

          Comment


            #6
            Originally posted by northernladuk View Post
            Because they aren't profits, just for clarity.
            Understood Thanks all.

            Comment


              #7
              Originally posted by GezHells View Post
              Thanks.

              And just to add one more scenario... this year I paid myself less than normal, only around half of the usual 8.5k. I assume it's OK to take a higher dividend to take me up to the personal allowance limit (12.5k + 2k tax free dividend allowance)?
              yes but why????
              Pay yourself the full salary to £8.5k and have less CT to pay as salary is an expense (before profit).
              See You Next Tuesday

              Comment


                #8
                Erm...It's slightly more complicated than that.

                Because its in your bank, doesn't mean that it is all "Profit"? For this you need your previous year's signed Accounts, plus the Management Accounts for the current year (If you use FreeAgent this is dead easy) to calculate what is available to declare & pay as Dividends.

                You will also need to have the relevant Dividend Declaration Minutes drawn, dated and signed.

                NLUK - Ask your Accountant for Professional (Insured) Advice.
                I was an IPSE Consultative Council Member, until the BoD abolished it. I am not an IPSE Member, since they have no longer have any relevance to me, as an IT Contractor. Read my lips...I recommend QDOS for ALL your Insurance requirements (Contact me for a referral code).

                Comment


                  #9
                  Originally posted by Lance View Post
                  yes but why????
                  Pay yourself the full salary to £8.5k and have less CT to pay as salary is an expense (before profit).

                  Possibly because in a previous thread he said he didn't need an accountant and he could do it all himself.

                  Hence my post about making sure there's still money in the pot. I fear he doesn't understand the difference between income and profit.
                  …Maybe we ain’t that young anymore

                  Comment


                    #10
                    Originally posted by WTFH View Post
                    Possibly because in a previous thread he said he didn't need an accountant and he could do it all himself.

                    Hence my post about making sure there's still money in the pot. I fear he doesn't understand the difference between income and profit.
                    Ohh it's that guy. Christ.. he can't even work this one out? I have a feeling we are going to be seeing a hell of a lot of this poster
                    'CUK forum personality of 2011 - Winner - Yes really!!!!

                    Comment

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