Personal Self-assessment: Dividend declared in one financial year and paid in another

[Greg@CapitalCity]

I'd be interested on this. I paid a dividend to myself but I only do my paperwork every 3 months. So the entry into the books was in the year before (PAYE) and the "entry" was in the year after.

The dividend still belongs in the year before (PAYE) because, it appears from what you are saying, you physically transferred the money at this point. The issue in this thread is "when is a dividend actually paid", and we know from CTM200958 that a dividend is not paid and there is no distribution, unless and until the shareholder receives money or the distribution is otherwise unreservedly put at their disposal.

This thread mainly discusses the "unreservedly put at their disposal" issue. For you though, its 'paid' at the time you prepare your dividend paperwork because this also happens to be when you actually receive the money.

[Sockpuppet]

Ah I should have mentioned that by 'paid' I mean transferred to my directors loan account along with all wages etc. I then take money out of here as and when needed.

[Greg@CapitalCity]

Ah I should have mentioned that by 'paid' I mean transferred to my directors loan account along with all wages etc. I then take money out of here in £10,000 blocks as and when needed.

My feeling is the level of detail is getting too granular here. Your dividend vouchers/board minutes point to the transaction occurring on date X. I think the HMRC will accept this as being the taxpoint date for the transaction. I have never seen an HMRC officer interrogate accounting software to determine what date figures were entered for a one person contractor ltd company. As mentioned before though, the best policy is to physically pay the dividend on the date it was declared. No fuss, no muss.

[Jessica@WhiteFieldTax]

My feeling is the level of detail is getting too granular here. Your dividend vouchers/board minutes point to the transaction occurring on date X. I think the HMRC will accept this as being the taxpoint date for the transaction. I have never seen an HMRC officer interrogate accounting software to determine what date figures were entered for a one person contractor ltd company. As mentioned before though, the best policy is to physically pay the dividend on the date it was declared. No fuss, no muss.

Concur

[7specialgems]

Just stumbled across this little gem.

After a lot of fuss and muss (as someone else put it) it came down to this:

1. If the Dividend was declared at a meeting of the shareholders, the date to use for tax purposes is the date that the meeting was held.

2. If the Dividend was declared at a meeting of the Directors, the date to use for tax purposes is either:

a) the date that the payment was physically made, or
b) the date of the meeting, if the amount to be paid was put aside and the dividend would/could not be rescinded and this date is earlier than 2a (in other words, hypothetically credited to the Director's loan account)

I won't be falling into this trap again!

[captainham]

Just stumbled across this little gem.

It was your thread?!

And as for the conclusion you have just reached, wasn't that the conclusion that was reached in the original lifecycle of this particular thread...