How often do you pay dividends?

[beaker]

Every month like a permie or only every 6 or 12 months like a "real" business?

Does this affect your IR35 status?

Any of you disguised employees care to comment?

[TheFaQQer]

I pay mine annually, and stick it in the offset mortgage.

It's what my accountant advised, but there are plenty that pay more often than that.

[shelby68]

pay part of it monthly but I've got a big chunk of my allowance saved this year so I'm thinking of changing that to 6 monthly for the next tax year as I'll have some fat to live off for a while.

does it make any difference to your IR35 status?

[MrRobin]

does it make any difference to your IR35 status?

This is discussed quite reguarly here... some say that paying regular divvies with your salary is a move towards disguised employment, some say it has no indication whatsoever. Proof is always absent and conclusions are rarely drawn. Fact is, you coupld pay a dividend daily if you wanted, would that be even more of a pointer to IR35??? Don't think so.

Personally, for the last year it's been 4 times, but ideally I would like to go for FaQQer's method when there is enough cash available.

[miffy]

I've not been trading long enough yet, but I plan on taking them every 6 months.

[TheFaQQer]

does it make any difference to your IR35 status?

Cue Denny!

[Gonzo]

I am sure that I remember one of the accountants that posts on here state that it is an urban myth that if you pay 12 monthly dividends of the same amount the HMRC will make out that it is in fact a salary.

I don't think that I can recall it ever being a consideration in IR35 factors to watch out for.

As for real businesses, back in my permie days I used to work for a very large American bank. They paid dividends to shareholders quarterly.

So long as there is profit in the company, there is no law against paying dividends as often as you deem fit.

[TheFaQQer]

So long as there is profit in the company, there is no law against paying dividends as often as you deem fit.

I guess that's the key thing - as long as there is profit. Most companies would pay the dividend out of retained profit, but there is a tendency amongst contractors to pay it out of expected profit. Until year end, I don't know how you will know what the profit really will be - and if you overpay the dividend and haven't got enough profit to cover it, it can lead to all sorts of nasty questions.

IANAA, but that's my considered opinion on the matter

[beaker]

Cue Denny!

I was hoping that my comment about disguised employees would be a cue for Denny

[Denny]

Any of you disguised employees care to comment?

I don't think they're interested in commenting.