Dividend date

[MickeyP]

Any accountants on here care to comment?

Because of the impending "income shifting rules" I want to take the biggest dividend possible.

My agency pays VERY fast. So it's likely that March's fees will arrive in my business account before April 5th.

However it will take time for a cheque to clear in my personal account which would take me into the following tax year?

[Hex]

Any accountants on here care to comment?

Because of the impending "income shifting rules" I want to take the biggest dividend possible.

My agency pays VERY fast. So it's likely that March's fees will arrive in my business account before April 5th.

However it will take time for a cheque to clear in my personal account which would take me into the following tax year?

Can you do BACS and get it cleared quicker?

[MickeyP]

Can you do BACS and get it cleared quicker?

Still minimum of 3 working days so not much better than cheque.

[TheFaQQer]

I think it's on when it is declared rather than when it is actually paid. That's what my accountant told me - last year I declared mine on April 4th but didn't get round to paying it until much later as I was away.

[Friendly Accountant]

Taxable when paid BUT......

For personal tax purposes, the dividend is taxable to you when it is paid, or available to you. Generally, when a dividend is declared, the payment date is specified. The company should prepare a tax voucher which states the date on which the dividend is to be paid.

Whether or not cash flows on the payment date is generally not relevant for a small company. If the payment date is before the end of March, the proper accounting for this in the company's records will be to credit the director loan account if cash is not paid on the date (assuming you are a director).

HMRC has indicated that an entry to the director loan account is enough for the dividend to be considered paid and therefore taxable to you.

In summary - company declares a dividend and specifies a payment date. That payment date determines when it is taxed. The fact that cash may flow later on is irrelevant.

[Hex]

Still minimum of 3 working days so not much better than cheque.

What about CHAPS then? Shouldn't cost much more than £30 and transfer is same day.

[Sockpuppet]

Any accountants on here care to comment?

Because of the impending "income shifting rules" I want to take the biggest dividend possible.

My agency pays VERY fast. So it's likely that March's fees will arrive in my business account before April 5th.

However it will take time for a cheque to clear in my personal account which would take me into the following tax year?

You can declare the dividend as long as you have the profit to do so. As this is done on invoice dates as long as you have invoiced for the work you can dividend the profit.

[Gonzo]

If you think about the way big companies (e.g. Lloyds) pay out dividends, they declare them months before they actually pay them. It is the date they pay them and you receive the money in your grubby little mits that counts as far as tax is concerned. So I reckon it must be the same for us.

Not quite. In advance they declare the dividend amount, the day on which new shares will not receive the dividend, the day that will count as the dividend date, and then the day it will be paid.

The dividend date is the one that counts for tax purposes, not when the money is paid, or when it is received by the shareholder.