Big divi new tax year

[sage@reillymcmordie]

Hi,
Am newbie, so excuse me if this is a pretty basic question, but I understand that a Director can declare a dividend on x date, but not actually withdraw it from the company until, (for example) a few months later. But at what date does the taxman consider you as an individual to have 'had' the money as ones own income, as opposed to belonging to the company?

Cheers,
KJ

The declaration or proposed date is not relevant. It is the date that the payment is made or determined to be made that becomes a tax point for the recipient. It is not relevant when the shareholder withdraws the dividend.

[Gonzo]

Hi,
Am newbie, so excuse me if this is a pretty basic question, but I understand that a Director can declare a dividend on x date, but not actually withdraw it from the company until, (for example) a few months later. But at what date does the taxman consider you as an individual to have 'had' the money as ones own income, as opposed to belonging to the company?

Cheers,
KJ

I am not an accountant, but as far as I have always been aware, it is the date that the dividend is declared that is treated as the tax point for your personal taxation.

Most of the time this doesn't really make any difference. Only when paying dividends around the end of the personal taxation year (5th April in the UK), when it would make a difference to the personal tax year that the dividend is taxed in.

[Kiwijane]

Hi,
Am newbie, so excuse me if this is a pretty basic question, but I understand that a Director can declare a dividend on x date, but not actually withdraw it from the company until, (for example) a few months later. But at what date does the taxman consider you as an individual to have 'had' the money as ones own income, as opposed to belonging to the company?

Cheers,
KJ

[Little'Old Me]

You still have 3 days to draw up to the 40% tax bracket.

DO IT or lose it!

If you do find yourself out of work for a while you will still have the money...only this time it will be in your bank account and not the company account....

Your company can issue a dividend and credit your directors account. Then its treated as a loan from you to your company.

You can then take it any time you want. You can even charge interest to your company if you don't take the cash!

[Billy Pilgrim]

You still have 3 days to draw up to the 40% tax bracket.

DO IT or lose it!

If you do find yourself out of work for a while you will still have the money...only this time it will be in your bank account and not the company account....

[Frogstomp]

As long as there are sufficient funds left in the business to meet its tax etc. exposure you could take as big a dividend as you like.

Of course, if you have not reached the 40% tax threshold for this year (including wages, dividends, interest etc) you would be better off drawing a dividend up to that level before April 6th.. it will leave you with more you can extract next year before you hit the limit.

If in doubt - ask your accountant!

[SuperZ]

Due to the credit crunch and preparing for the worse I took out less dividends in this current tax year than I could of just in case I find myself out of work for a while this year. Would it be perfectly okay to take a BIG dividend when the new tax year starts (possibly the only divi for the year) or will it draw any kind of attention? I`m fairly new to ltd company running and paranoid about the man who wants his tax.