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Taking a dividend

Dividends are payments made to company shareholders from the profits of the company (after Corporation Tax). They can be the the most tax efficient way to take profits from your limited company.

Learn more about the dividend thresholds for the 2018-19 tax year.

Important: The available dividend shown in your Crunch account doesn’t always match your bank balance and isn’t a representation of your cash flow. We calculate the amount of tax you owe based on your profit, but can’t take into account expenses you haven’t yet recorded.

Responsibilities when taking a dividend

When taking a dividend, it’s your responsibility to ensure you have enough profit to cover the withdrawal.

Before you take a dividend, it’s vital your account is fully up to date, with all expenses recorded and all bank accounts reconciled. This will ensure the available dividend amount as shown in your Crunch account is accurate.

When preparing your company accounts, we'll check to see if you had adequate profit available on the exact date each dividend was paid. If you’ve failed to record expenses that would have reduced your profit to below the amount of the dividend payment, the withdrawal may be considered illegal.

Paying dividends to shareholders

Dividends must be paid into the bank accounts of shareholders. Each bank payment must be clearly identifiable towards each respective shareholder.

If you have a joint bank account with another shareholder (such as your spouse), dividend payments to each director must be identifiable.

Dividend and salary payments

Your dividends and salary payments must be made in separate bank transfers. We recommend setting up a monthly Direct Debit for salary payments to help with this.

Last Updated: 09 May 2018 12:26PM BST
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