Dividend taxable date

[superba]

Hi,

I have a question regarding dividend tax.

If I declared a dividend on 23 March 2009 (Ex-Date) and Pay Date was 30th March 2009. Say a cheque to the shareholder was written, but it was banked by the shareholder on 30th April 2009. Which tax year does the income fall under for the receipient? Is it taxed on an accrual or payment basis in terms of personal income tax on the receipient.

Thanks in advance for your help.

[Hex]

Hi,

I have a question regarding dividend tax.

If I declared a dividend on 23 March 2009 (Ex-Date) and Pay Date was 30th March 2009. Say a cheque to the shareholder was written, but it was banked by the shareholder on 30th April 2009. Which tax year does the income fall under for the receipient? Is it taxed on an accrual or payment basis in terms of personal income tax on the receipient.

Thanks in advance for your help.

It's taxed based on the Pay Date. 29th March 2009 in your example.

[Sally BFCA]

I think it's the date on the dividend voucher as this is the official tax receipt.

[superba]

many thanks - I hoped this was the case, but panicked when I realised it may not be.

Thanks again for your help.

[moorfield]

I think it's the date on the dividend voucher as this is the official tax receipt.

WSS.

I've always understood it to be the voucher date (my number bods don't put a pay date on my vouchers).

So if you declare a divi on 23 March 09 and pay it on 30 April 09,
it goes on your 2008/09 self assessment, not 2009/10.

[Colourful Contractor]

That's interesting, I was annoyed that I hadn't made the most of my basic tax allowance last year and disn't pay myself upto the max threshold before 4 apr (or whatever date). So I could have gone back and paid it a month later and 'issued' div declaration based on previous tax year? Not that I'm about to try that 7 months on...

[Sally BFCA]

That's interesting, I was annoyed that I hadn't made the most of my basic tax allowance last year and disn't pay myself upto the max threshold before 4 apr (or whatever date). So I could have gone back and paid it a month later and 'issued' div declaration based on previous tax year? Not that I'm about to try that 7 months on...

As the dividend vouchers are not sent anywhere (as in HMRC), the only record of dividends paid in is the financial accounts and on your self-assessment tax return.

So if neither of these have been filed and you are still in your same financial year, nobody knows what dividend dates have been declared, do they?
There does of course, have to be sufficient profit in the company on the date the dividend was declared, even if it was credited to the DLA and not physically paid out.

Other opinions on this would be welcome

[Gonzo]

I think that this thread is getting the terminology for publicly listed companies and private companies terribly mixed up.

It starts to go wrong here:

If I declared a dividend on 23 March 2009 (Ex-Date)

The "ex date" is not the date that the dividend is declared.

The "ex date" applies to shares that are traded and all shareholders that own the shares on the "ex date" will receive the dividend that is paid on the "paid date". People that buy the shares between the "ex date" and the "paid date" do not receive the dividend, conversely people that sell between those dates do.

The "paid date" is always used as the tax point for the dividend, you can't move the tax treatment to another tax year by simply not banking the cheque.

Having said that, I don't think that any of that applies to private companies and the tax point is always the date that the directors hold the meeting that agrees to pay the dividend, regardless of when the payment is actually made.

As usual, I am not an accountant and might be wrong so you might wish to take professional advice.

That's interesting, I was annoyed that I hadn't made the most of my basic tax allowance last year and disn't pay myself upto the max threshold before 4 apr (or whatever date). So I could have gone back and paid it a month later and 'issued' div declaration based on previous tax year? Not that I'm about to try that 7 months on...

As said above, the tax point is the date that the directors hold the meeting to agree the dividend, not when it is actually paid. Is it possible that the meeting was indeed held and the paperwork "slipped behind a filing cabinet" and has only just come to light?

This might create a little headache with your books but your accountant can advise.

[Maslins]

Is it possible that the meeting was indeed held and the paperwork "slipped behind a filing cabinet" and has only just come to light?

You'd be amazed how often that seems to happen.

[Colourful Contractor]

Going to see what my accountant says, but imagine they will be cautious given that it is so far after the end of the tax year..