Paying Dividends from Previous Year's Retained profit

[juju]

I have read many threads talking about Paying Dividends from Positive Retained Profits - but does this have to relate to the current Year?

We have enjoyed 6 years of retained Profits and this year so far are showing a smallish loss. Is it possible to still pay ourselves Dividends each month although for the first three months we have not made a pre-tax profit. Effectively we are reducing our previous Year's retained profits by doing so.??
Help Please????

 

[David Griffiths]

No problem. You can pay dividends at any time that you have the profits available to do it, and that refers to total historical profits, not just the current year.

 

[juju]

David
Many Thanks for such a quick reply. And just the answer that I needed too!!!​

 

[David Griffiths]

I'm not used to telling people what they want to hear! Makes a nice change.

 

[elaine@cheapaccounting]

I'm not used to telling people what they want to hear! Makes a nice change.

I will make a note of the date - as this is like a blue moon!

 

[tmeah7]

No problem. You can pay dividends at any time that you have the profits available to do it, and that refers to total historical profits, not just the current year.

What happens if you make a profit first year of business but choose to retain the profits. However second year you make a loss which wipes out the first years profits - is there any way of still paying dividends based on first year profits or is there any way to access the first years profits in a tax efficient manner as a director (e.g is it a good idea to always take out dividends but immediatly relend the money back to the business)?