Dividend Declared 4th April - Cleared 7th

[Iain-Le-Roi]

Hi all

I declared and paid myself a Dividend just before the end of the tax year on the 4th April. I actually made the payment on the 4th April from my internet banking site with Cater Allen. As Cater Allen aren't part of the faster payments scheme this has only cleared today - 7th of April which is obviously the 11/12 tax year.

My question is which year should the dividend be filed under for my personal tax return: the 10/11 tax year or or the 11/12 tax year as the payment was made in 10/11 but the money cleared in 11/12?

I tried searching on this but only found similar posts without a definitive answer.

Thanks for your help

Le-Roi

Iain

[Craig@Clarity]

It will be declarable income for 10/11 as the dividend was declared before the new tax year.

[Danielsjdaccountancy]

It is the date the money is made available to the shareholder

• The date the chq is posted to the shareholder, which is normally the date of the dividend voucher and the date of the cheque.
• With an electronic payment it is the date it left the company bank account, not the date it reaches the payee bank account.

[MarillionFan]

Well I normally wait until after the end of April before calculating the profit and then making the dividend payment for the previous year. I don't believe that the 'day' you cash it has any bearing whatsoever. It needs to be highlighted in the account as when it was payable AFAIK.

[Craig@Clarity]

Well I normally wait until after the end of April before calculating the profit and then making the dividend payment for the previous year. I don't believe that the 'day' you cash it has any bearing whatsoever. It needs to be highlighted in the account as when it was payable AFAIK.

WHS. It's not the actual payment date but the declaration date.

[sbakoola]

this is exactly what my last post was asking. I put the cheque in today, photocopied it before I handed it to the cashier dated 7th Apr 2011 and then got the stamped receipt also with 7th Apr 2011. I declared my dividend payment declaration at home dated 7th Apr 2011 it and signed it including cheque no and Gross and Net divident.

You never know when the tax man may need such proof that the dividend payment falls into the current tax year and not the previous. SJD advise their customers to do this, good advice me thinks.

[MarillionFan]

this is exactly what my last post was asking. I put the cheque in today, photocopied it before I handed it to the cashier dated 7th Apr 2011 and then got the stamped receipt also with 7th Apr 2011. I declared my dividend payment declaration at home dated 7th Apr 2011 it and signed it including cheque no and Gross and Net divident.

You never know when the tax man may need such proof that the dividend payment falls into the current tax year and not the previous. SJD advise their customers to do this, good advice me thinks.

It's more to do with your book keeping process to be honest.

For my retail accounts I prefer to reconcile my accounts directly to the bank statements. Therefore everything must be paid within the year/quarter.

With my LTD it may be some months after a year end before I do my final accounts and find out how much profit there was. At which point I declare the divvy for the previous year.

I think you're worrying a little too much.

[VectraMan]

Good to see two of the resident accountants giving different answers.

[Danielsjdaccountancy]

Craig and I are on the same lines.

Bascially its not the date the dividend hits your personal account.

[Craig@Clarity]

Ok here goes. I'll try and explain without sounding too "tax like"

Under ITA 07, dividend income is chargeable under Chapter 3 of Part 4 of ITTOIA 2005. In Section 385 (1) (b) under Chapter 3 of Part 4 of ITTOIA 2005, it says that the person liable for tax is "the person receiving or entitled to the distribution"

My understanding is that if a dividend is declared on the 4 April but not actually paid until the 7 April, then the dividend is subject to income tax in the last tax year as that person was entitled to it.

The links for reference are here: Income Tax Act 2007 and http://www.legislation.gov.uk/ukpga/...rt/4/chapter/3