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Company dividends are payments made to company shareholders from the profits of the company, after corporation tax (profit after tax).
Dividends are the most tax-efficient way to take your income after you’ve exceeded the National Insurance threshold and are accounted for between 6th - 5th April each financial tax year - check out our super handy Crunch Knowledge “What are Dividends?” article to stay in the know with dividend allowances.
Step-by-step instructions
Start by navigating to ‘Pay Yourself > Dividends’:
Then select the ‘New Dividend’, to the top right of your account:
On the new dividend form, start by entering the date you’d like to issue your dividend:
Once entered, at the top you’ll notice that your Crunch account calculates a “Maximum Dividend Available” on that date, based on income, expenses, corporation tax, etc. as shown below:
After checking the dividend amount available, enter the amount you wish to take:
Please be aware, that due to the nature of “Ordinary Shares” you cannot issue dividends for shareholders only, as all director(s) will also need to receive dividends based on the company share split ratio - for example, if you wanted to pay yourself £2,500 in dividends but have a 50/50 split on shareholding with another shareholder, you’d actually need to issue £5,000 in total and your Crunch account will split this according to the number of shares held at that specific date.
The dividend breakdown form will display the dividend amount for each shareholder based on the number of shares held on the specific date selected:
You’ll notice that the ‘Create withdrawal’ box is unavailable to select for the shareholder, however, it remains available for the director.
The reason for this is simply because you cannot record a shareholder dividend payment as a “withdrawal”, because they’re not a director of your limited company:
Checking any of the available ‘Create withdrawal’ boxes will populate a “withdrawals” section underneath, and from here you simply need to enter the payment details of each withdrawal or use the ‘Same withdrawal details for all director withdrawals’ option to specify that all withdrawals used the same payment method - whichever you choose, a withdrawal entry will be created for everyone that had the box ticked.
Please note, if you wish to issue dividends as a director without creating a withdrawal, you can just click ‘Save’ to issue them without one and this will show as “credit” on your director loan account.
Once you’ve issued the dividend(s) you’ll need to record your shareholder dividend payment separately.
How to record shareholder payments
To record payments made to a shareholder, navigate to ‘Pay Yourself > Dividends’ and select the blue figure underneath the ‘Shareholder details’ column and select the ‘Options’ menu for each shareholder.
Then, choose 'Record/Edit dividend payment to Shareholder’:
From here, you’ll be asked to specify how this was paid to the shareholder.
Generally speaking, most will be paid directly from the business bank account, so choosing the ‘Transfer out of business account’ dropdown menu option will reflect that it has been paid directly from the bank account and to the shareholder(s).
Using the same ‘Options’ menu will provide the ability to download dividend voucher(s) as .PDF documents and/or email them directly to the shareholder(s).
Related Help Centre articles
Need some more help with director withdrawals?
You’ll find all you need to know about them in this helpful article.
Do you have a negative director loan account balance?
There’s a handful of reasons that this balance could be reflected as a negative figure, however, one of the most common causes can be created by director withdrawals being recorded without dividends being issued alongside them. We go into more detail on the potential possibilities for a negative “DLA” balance, in this handy article.
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