I know its been asked before but optimum Dividends payment frequency / amount

[eliquant]

I'm thinking of paying myself dividends this year as its past April 6th 2010 (new tax year).

Can you pay yourself the whole £28K in one lump (say end of April) or is it best to straddle the payments throughout the year ? What about quantities should each net dividend payment amount not matter ? Should the payments be totally irregular so as not to be regarded as 'wages income' via Hector ?

I just want to do it the right way.


advice please ....

[cojak]

I tend to do it in half-yearly lumps.

But that's just me. You'll get differing advice from accountants.

[VectraMan]

You can pay dividends once a year, once a day, just on months with 31 days, or on rainy days for no other reason than you want to cheer yourself up (I've done that before).

Makes no difference. Do whatever suits your personal finances best.

[eliquant]

Sort of grey advice above, what I don't want to happen is someone saying 'nah that's NOT really a dividend payment its a BONUS or a WAGE !' - I guess the WRONG way to do it is to pay yourself a dividend - same amount on the same end of the month day then it could be interpreted as a wage by Hector (!) - or is that a load of Cods Wallop ???!?

[Gonzo]

Sort of grey advice above, what I don't want to happen is someone saying 'nah that's NOT really a dividend payment its a BONUS or a WAGE !' - I guess the WRONG way to do it is to pay yourself a dividend - same amount on the same end of the month day then it could be interpreted as a wage by Hector (!) - or is that a load of Cods Wallop ???!?

The idea that HMRC could reinterpret regular dividends for regular amounts as salary is something that seems to exist in the contractor mindset, hell, even I have thought it was the case.

I am sure I have seen one accountant on here post that it is cods wallop. The directors of your company can declare dividends as often as they like provided there is profit in the company to cover them.

Either way, HMRC would be investigating your company down to the level of bank statements and dividend minutes before they found out how frequently you were paying them so the dividends would probably be the least of your worries at that point.

One big annual dividend is probably the best but it takes a lot of discipline on your part to make it last the whole year. I only managed to survive on quarterly dividends.

[MarillionFan]

I just go with, oh look I have profit in the business. Think I might take a dividend!

Always tended to work out quarterly though to correspond with my VAT returns.

[Sockpuppet]

As above when ever the hell you want.

Personally I do 3 dividends a year of £10k becuase I like round numbers and that plus some salary keeps me nicely in the lower tax threashold.

[SuperZ]

As others have said, take them whenever you want. I tend to take two big dividends within a month of each other after the start of the new financial year for no reason other than my bank won't let me transfer large amounts in one go despite me raising the limit a few years ago which obviously never got processed correctly and I can't be bothered to ask them again.

Why only 28k or 30k? Isn't the 40% tax band at £37,*** + personal tax allowance of £6,*** or so = £43,000 before paying 40% tax?

[norrahe]

I pay mine monthly and my accountant has never advised against it.

[eliquant]

As others have said, take them whenever you want. I tend to take two big dividends within a month of each other after the start of the new financial year for no reason other than my bank won't let me transfer large amounts in one go despite me raising the limit a few years ago which obviously never got processed correctly and I can't be bothered to ask them again.

Why only 28k or 30k? Isn't the 40% tax band at £37,*** + personal tax allowance of £6,*** or so = £43,000 before paying 40% tax?

because I pay myself £12k wages per annum.