Dividend - paying tax credit

[Shirty Girl]

This is a really simple question but I can't find the answer to it anywhere ...

I want to pay myself a dividend.
I know I have to deduct a 10% tax credit. I then pay myself the remaining 90%.

Who do I pay the 10% tax credit to? How do I pay it? When do I pay it?

Many thanks,

Helen

[Maslins]

You don't deduct anything from the dividend. The 10% is a notional tax that you don't really pay. It only becomes relevant when you fill in your tax return.

Eg If you want to pay a £5k dividend (that's £5k of after tax profits from the ltd co), draw out £5k, and prepare a dividend voucher showing net dividend £5k, gross dividend £5.556k, tax credit £0.556k.

The £5.556k goes on your tax return as divis received, and the £0.556k shows kinda like tax paid at source.

[Shirty Girl]

But that would mean I wouldn't pay any tax on the dividend AT ALL. Does the Inland Revenue know about this? ;-)

[Zeno]

But that would mean I wouldn't pay any tax on the dividend AT ALL. Does the Inland Revenue know about this? ;-)

You paid corporation tax on the profits out of which you are paying this dividend is the simplest way to explain it.