Take dividend in the last month of the tax year?

[wanstronian]

Hi all,

My dividend payments for the current tax year are over the 33.75% tax threshold. I pay myself dividends every three months as a rule. However, that would mean the next dividend would be paid at the end of March, so still in the 24/25 tax year and incurring 33.75% dividend tax.

It seems to make sense to wait an additional month and pay it in April, that way my dividend earnings will be reset for the 25/26 tax year and the dividend will incur less tax.

Am I missing something? (other than my 25/26 dividend earnings will accumulate sooner in the tax year)

[sadkingbilly]

what does your accountant suggest??

[Craig@Clarity]

If you don't need the cash straight away then your basic understanding of tax planning is spot on.

[jamesbrown]

Personally, I avoid regular/scheduled dividend payments, like monthly or quarterly, although as long as they are clearly separated from salary payments, it's probably fine. In terms of tax, it is clearly the case that delaying to a new tax year will afford a lower rate of dividend tax insofar as the top slice of your income (where dividends sit) is lower by the end of the next tax year. Obviously, if it isn't (lower income), then it isn't (lower tax). Unfortunately, life often gets in the way of your best plans.

[northernladuk]

Am I missing something?

Yeah. An accountant by the sounds of things.

You can take dividends as often and for as much as you want. Why stick to a set routine which then gets you in to complex situations you need help with?

[ladymuck]

As long as the dividend is legal, you can issue it whenever you want.