Dividends - YTD profit, delay in payment

[coolpixel]

i am an IT contractor, with own ltd company and just me and my wife as directors. started this gig recently and new to all this.

i have 2 questions - is it okay to take out dividends which is more than my monthly profit BUT is well within my YTD profit, after allowing for corp tax.

for example, my average monthly profit is about 5k, but my YTD profilt is 45k since i had some bumper months. i am thinking of taking out 20k in dividends split between the two of us.

is this okay?

secondly - once dividends are declared, i was told, their actual disbursement can be made after several months, so long as they are within the same tax year. is that okay too?

[TheCyclingProgrammer]

Your monthly profit is irrelevant. It's your net profit after tax for the current year plus any retained profits from previous years that matters. If the company has sufficient reserves it can declare a dividend.

A dividend doesn't necessarily have to be paid when it's declared. A dividend could be declared payable on a future date or payable immediately but credited to your director's loan account for you to withdraw at a future time (but it would be considered paid and taxable in this case).

[Lance]

Why would you want to declare a dividend but delay payment by months? It makes no sense.

[SueEllen]

Why would you want to declare a dividend but delay payment by months? It makes no sense.

Cos you don't need the money but there are personal tax changes, and are in the middle of moving personal bank accounts.

That was my reason last year.

[coolpixel]

Cos you don't need the money but there are personal tax changes, and are in the middle of moving personal bank accounts.

That was my reason last year.

thank you Sue Ellen. more or less my reason. wife didn't need the money, but there were/are personal tax changes.