Dividend payment into account(s)

[NorthWestPerm2Contr]

Just a quick question:

If i wish to draw some dividends in wifes name does it has to be into her account or can i take it into mine and just declare it on her account at the end of the year? Also does she require equal split of shares to receive the same dividends? Any info on this would be much appreciated.

[eek]

Also does she require equal split of shares to receive the same dividends?

I've split it to make it clear.

A dividend is declared against a share so with a £1,000 dividend and 100 shares each share receives a dividend of £10. So to give her an equal payout she needs an equal number of shares.

Just a quick question:


If i wish to draw some dividends in wifes name does it has to be into her account or can i take it into mine and just declare it on her account at the end of the year? Any info on this would be much appreciated.

I would say do a search on here but I remember someone complaining that HMRC didn't even like a joint dividend going as a single payment into a joint bank account. In my case everything ends up in a joint bank account but I do make two separate payments.

Personally I wouldn't take the risk and would pay the money into an account in her name.

[Wanderer]

Personally I wouldn't take the risk and would pay the money into an account in her name.

Agreed. Or a joint account. If you don't have a joint account then you should open one.

[Old Greg]

I'm so paranoid that the payment goes into the wife's own account and then she transfers it into the joint account.

[Clare@InTouch]

Also does she require equal split of shares to receive the same dividends? Any info on this would be much appreciated.

Yes - unless you have alphabet shares (which I would now recommend avoiding due to s660a dangers) then dividends have to be paid out in proportion to shares held. If you have 100 shares and they are held 70:30 than a £10,000 dividend would need to be paid £7,000:£3,000.

You can pay into a joint account, just make sure you have the necessary dividend voucher to back up the transaction.

[backrubber]

You can generate a dividend tax voucher here if you need to:

Earnings Tracker

[ASB]

Potential alternative is dividend waiver, however this is on radar as a warning sign to HMRC again for potential S660 attack. [See link: HMRC opinion is pretty clear it would be caught, but that doesn't make them right]

If shares were held 70:30 and it was required to pay 5k to each shareholder then the 70% holder could waive some of theirs.

A particular risk would be that in effect this would be declaring a dividend of 166.67 per share. HMRC would be asking potentially significant questions if there were not a total of 16667 distributable reserves (rather than the 10k actually declared) because the dividend would only be allowed to be paid because of the waiver.

In any event in the example above even if HMRC view is accepted only 2k should be at risk under S660 since this is the effective enhancement received by the non waived shareholder.

TSEM4220 - Settlements legislation: dividend waivers
TSEM4225 - Dividend waiver - when Settlements legislation may apply