Deferring Dividend payments

[Ashwin2007]

Can a company declare dividend and pay it to the shareholders in parts?
Example:
Dividend declared £10000 on October 1
Paid to the shareholder (sole shareholder & director)
On Nov 1 : 3000
On Dec 1 : 3000
On January 1: 4000

This way, I want to avoid declaring devidends too often. Is this allowed?

[badger7579]

Why???

[moorfield]

Can a company declare dividend and pay it to the shareholders in parts?
Example:
Dividend declared £10000 on October 1
Paid to the shareholder (sole shareholder & director)
On Nov 1 : 3000
On Dec 1 : 3000
On January 1: 6000

This way, I want to avoid declaring devidends too often. Is this allowed?

As long as the divi paperwork is done and the whole divi amount is allocated to the right year on your Self Assessment, I don't see a problem with that. But IINAC etc. etc. I think the number bods put unpaid divis on to the directors account.

There is frequently a lag between when I declare and pay the divi out, albeit only 7-10 days but I always pay the full amount.

But unless your ltdco is suffering cashflow problems, why not just pay out the full amount and stick the rest in a savings account somewhere?

[Platypus]

My accountant told me "no"

If you want to do this, declare a dividend and (on paper) transfer the funds to the director's loan account, from where it can be drawn at your leisure.

You need additional paperwork to do this. An EGM I recall.

Speak to your accountant.

[Maslins]

Yes, that's perfectly fine.

As others have suggested, the declared dividend (which should you do proper paperwork for, dividend voucher, board minutes) will simply sit as a creditor on the balance sheet as money owed to you.

You can then draw that down at a later date with no further tax consequences.

[Lewis]

Can a company declare dividend and pay it to the shareholders in parts?
Example:
Dividend declared £10000 on October 1
Paid to the shareholder (sole shareholder & director)
On Nov 1 : 3000
On Dec 1 : 3000
On January 1: 6000

This way, I want to avoid declaring devidends too often. Is this allowed?

You must have the full £10,000 profit on the 1 October of course ...

[northernladuk]

Didn't we ascertain in another thread that you can't really declare dividends too often as long as you don't get stupid with it. I thought monthly was perfectly acceptable?

Am having a long day so excuse this if it's really stupid but 3+3+6= 12k.... you declaring 10k?? Shum Mishatake Shurley..

[ASB]

Yes, that's perfectly fine.

As others have suggested, the declared dividend (which should you do proper paperwork for, dividend voucher, board minutes) will simply sit as a creditor on the balance sheet as money owed to you.

You can then draw that down at a later date with no further tax consequences.

True, but there are circumstances in which it can be a disadvantage. e.g. declare 100k of dividend in year 1. About 60k of this will be subject to higher rate tax irrespective of when it was paid.

Ensure that anything declared but unpaid doesn't go into a higher rate bracket.

If one want to be creative with Tax Credit check out how the 25,000 income disregard for one year works. The system is open to exploitation (as I found out by mistake!).

[Ashwin2007]

Thanks very much for all your responses.

Why???

The main reason is to avoid paper works pertaining to dividends. I also want to avoid looking like declaring dividends too often.

Of course on the date of declaring dividend, I have enough profit to declare the dividend.

I am not sure whether I should transfer the complete declared dividend amount within the company's tax year (in my case it is October to Sept) or Director's personal tax year (April to March), and the implications of doing one way or the other.

In case of deferred dividend payments, on the Dividend declaration minutes, I want to mention that the declared dividend will be paid to the shareholder on the fiollowing dates:
Date Amount Paid
.... .......

This way I have fewer number of dividend declaration minutes to prepare..

[BolshieBastard]

Didn't we ascertain in another thread that you can't really declare dividends too often as long as you don't get stupid with it. I thought monthly was perfectly acceptable?

Am having a long day so excuse this if it's really stupid but 3+3+6= 12k.... you declaring 10k?? Shum Mishatake Shurley..

Utter bollocks. There's nothing in legislation which states how frequently or infrequently dividends can be paid. A company can declare dividends as frequently as it likes.