Reply to: How many time a year do you draw dividends?

[PhilAtBFCA]

Dividend Frequency

normally if you are declaring a monthly divdend you would be advised to vary the amount being i.e £1000 in June and 900 in July .

Hi Watford,

Yes I see where you are comming from, but I think you are missing the point.

It is not the fact the you are taking regular dividends. the question is - Are those dividends linked to your profit. If the profit fluctuates - does the dividend too ?

To put it another way -

How does taking £1000 in one month and taking £900 in another defend any position with HMRC when in the first month your profit was £2000 and the second £3000 , for instance.

Dividends come from retained profits in the business.

Hope thats helps

Phil

[AZZIK]

Would it not look dodgy in the eyes of HRMC?

I've never taken divs more than 2-3 times a year as I was under this impression.

No.

So then why ask?

[opc]

I take dividends as often as and of a magnitude that the company can afford but generally monthly simply because I don't trust myself not to take it quarterly and spend it in 6 weeks.

[watford]

How many time a year do you draw dividends?

Hi I am new here . As I understand there is no offical guide on how many times you can declare a dividend , normally if you are declaring a monthly divdend you would be advised to vary the amount being i.e £1000 in June and 900 in July ,Normally there is a threshold ceiling to dividend tax I think it's over £43,000 then you pay divdend tax at a higher and of course you have to sign the board meeting minutes in which you sign and send to your accountant when you delclare a divdend.

[FiveTimes]

I make a payment each quarter and then one to mope up at the end

[PhilAtBFCA]

Dividend Frequency

Le Rosbif,

Hi - yes I agree with the general opinion that you can take them when you want to.

I think I would add :-

When you decide to take a dividend, look at your P&L and Balance Sheet to make the decision, do not do it on the basis that the company has got £x, the company needs £y so I can have £z. In other words make a commercial decision as a director of the company - not as the shareholder - ( yes I know you are probably both ) but it is the director who decides what dividends to give to the shareholders based on the profits of the company and the future needs for capital of the company.

As a director you might see that the company can issue a dividend each month, for varying amounts or the same amounts, and this may well be fine. But if you dont do the process ( making a director's decision ) ,you may find yourself caught out at some future point.

Phil

[Hex]

Most larger companies (and virtually all plc's) pay dividends quarterly.

Most PLCs pay 6 monthly dividends. A few pay quarterly. Probably less than 10% of the FTSE 100 pay quarterly I reckon.

[tino]

Not quite./ As a director for most people it is to pay yourself a salary of the lower earnings limit thus incurring no NI or tax at all. Do the rest in dividends (if you have paye income from anywhere else pay yourself a nil salary). As a director, unless you have a contract of employement you do not currently need to pay minimum wage. That's about a grand you can save.

Will you be my accountant - your suggestions (i won't use the term advice) seem a damn site more on the ball than his

[ASB]

I take them monthly in combination with a minimum wage salary. Seems the most tax efficient way of operating. Has zero relevance to ir35

Not quite./ As a director for most people it is to pay yourself a salary of the lower earnings limit thus incurring no NI or tax at all. Do the rest in dividends (if you have paye income from anywhere else pay yourself a nil salary). As a director, unless you have a contract of employement you do not currently need to pay minimum wage. That's about a grand you can save.

[centurian]

I was told by my accountant to take one quarterly at most so thats what i do. She said she would not recommend any more than that.

Reasons for that i do not know and do not care, thats why i pay an accountant.

Most larger companies (and virtually all plc's) pay dividends quarterly. It's part of the reason why share prices in plc's fluctuate as traders buy into shares just before the dividend qualifying date and dump them soon afterwards.

Whether this means small Ltd's should do the same is another matter. Maybe some accountants feel that HMRC will be more likely to view as as genuine businesses - not convinced of that myself.

That said, for most established contractors, there is rarely a need to take divs more often than quarterly, so we might as well keep to those limits.

[badger7579]

I take them monthly in combination with a minimum wage salary. Seems the most tax efficient way of operating. Has zero relevance to ir35

[Sausage Surprise]

Monthly....makes no difference at all to HMRC and like someone has said, how do HMRC know that you are taking them monthly unless they investigate?

[Durbs]

I was told by my accountant to take one quarterly at most so thats what i do. She said she would not recommend any more than that.

Reasons for that i do not know and do not care, thats why i pay an accountant.

[d000hg]

Quarterly seems a nice balance for me, if I can manage it... not been doing this long enough to build up my safety net yet.

[Mustang]

Is there anymore paperwork required other than declaring them in the Final Year accounts and Self-Assessment?

1) Tax voucher

2) Minutes of shareholder meeting when the dividend was declared.

Seek professional advise since I am not qualified to give this but that's what I produce.

HTH