Taking dividends from your company
Because HMRC’s enquiries are on the increase it’s a good time to revisit our “dos and don’ts”on taking dividends.

Don’t forget the Company Law when considering dividends, ie dividends are paid to shareholders based on the available retained profits of the company

  • do liase with us and refer to your management accounts so you know what level of profit is available
  • don’t take dividends as monthly income. (HMRC may argue such dividends actually have similar characteristics to that of a monthly salary. As a result, the tax and national insurance could be charged on these regular dividends, leaving you out of pocket and with an unexpected tax bill.)
  • do take infrequent dividends – we would recommend no more than 4 per year
  • do ensure dividends are paid in line with your limited company shareholding (Company law), eg if you have 90% of the shares, then you should take 90% of the dividends

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