Dividend Paid to Directors

[asimsattar]

I have been looking on the internet and HMRC website but not find answer to this question. Can anyone guide me in this regard.

I have a limited company and working as a director of the company. During the year i received dividend of £10,800 (net). I did not receive any salary or any other benifit and do not have any other source of income.

Do I have to register for PAYE and also pay NIC. or do not need to do anything as i suppose tax has already deducted from that dividend. and I also understand I have to register for PAYE only if i receive salary but not if i receive dividend.

I would be grateful if someone can help me.

[KidsBeeHappy]

Dividends aren't paid to directors, they are paid to shareholders.
Salaries/Wages are paid to directors, (and sometimes bonuses).
You have to pay dividends at equal rates, in equal proportions to all shareholders.

So, assuming you are the sole shareholder, yes you can pay yourself a dividend.

However, HMR&C are not likely to be particularly happy with a director that takes no remuneration and solely dividends. So, i would, as a minimum pay yourself a small salary and return appropriate PAYE forms.

[maxh]

I have been looking on the internet and HMRC website but not find answer to this question. Can anyone guide me in this regard.

I have a limited company and working as a director of the company. During the year i received dividend of £10,800 (net). I did not receive any salary or any other benifit and do not have any other source of income.

Do I have to register for PAYE and also pay NIC. or do not need to do anything as i suppose tax has already deducted from that dividend. and I also understand I have to register for PAYE only if i receive salary but not if i receive dividend.

I would be grateful if someone can help me.


Whats with all this forum code eh?

[MyAccountantOnline]

Do ask your accountant for some guidance on this - its generally best for directors of small companies to pay a combination of salary and dividends.

This explains when you need to register as an employer -
http://www.hmrc.gov.uk/paye/intro/register.htm#1 (http://www.hmrc.gov.uk/paye/intro/register.htm#1)

[asimsattar]

Thanks for the reply.
yes i am also the only shareholder.

from your reply i understand that i do not need to register for PAYE if I only receive dividend.

Please correct me if i am wrong.

[KidsBeeHappy]

You are technically correct. But then you'd be wasting your personal allowance?

[Tom McClelland]

You are technically correct. But then you'd be wasting your personal allowance?

Unless they have other income, which is why their accountant with full knowledge of their affairs may help.

[Tom McClelland]

Unless they have other income, which is why their accountant with full knowledge of their affairs may help.

EDIT: Ah, I see, stumbling through the forum code, that they don't have any other income.

[KM-Tiger]

EDIT: Ah, I see, stumbling through the forum code, that they don't have any other income.

In which case their generous gift to HMRC will help keep taxes down for everyone else.