Shares and dividends
- Thread starter boddy09
- Start date
You can waive your right to taking a dividend, a very short note in the company's file will do.
However, you have a problem with taking a monthly dividend - don't do it! There are many who say that you can have a dividend every month / week / day if you want to which is true. However, this is not within the spirit of running a company and why attract attention to yourself when you do not need to do so.
Let your partner take a quarterly dividend and you waive your right to the payment.
However, you have a problem with taking a monthly dividend - don't do it! There are many who say that you can have a dividend every month / week / day if you want to which is true. However, this is not within the spirit of running a company and why attract attention to yourself when you do not need to do so.
Let your partner take a quarterly dividend and you waive your right to the payment.
Upvote
0
As long as the company makes enough profit to cover the dividend then it doesn't matter at all how often you take a dividend.
I'll echo David and ask where there is more information on this "spirit".
Upvote
0
The OP certainly raises a question i'd like to understand in more detail, but why stand in the way of looking for this 'spirit' info 
Upvote
0
The problem with monthly dividends is that they look like a salary and may be more susceptible to be challenged by an inspector.
You should be ok if the paperwork is correct but why attract unnecessary attention?
It is also important to separate the dividend and wage payments to demonstrate that these are different (OP suggests that this may not be the case).
You should be ok if the paperwork is correct but why attract unnecessary attention?
It is also important to separate the dividend and wage payments to demonstrate that these are different (OP suggests that this may not be the case).
Upvote
0
Your accountant would be a good place to start for asking this kind of advice which can get complicated and there are some potential pitfalls. Getting advice from a forum when large amounts of your children's inheritance could be at stake if you get it wrong is not a good idea.
There's absolutely nothing wrong with monthly dividends - ignore those scaremongers who say otherwise. If you've got the right paperwork in place, a monthly dividend can't be challenged. It's the "law" that matters and there's no law to prevent it, whatever HMRC inspectors and some accountants may like to think otherwise. There's no such thing as "spirit" - if Govt and HMRC wanted to stop monthly dividends, they could change the law accordingly - monthly dividends have been happening for decades, so they've had plenty of time to stop it, and even if they do change the law, it will only apply to future dividends, not past.
The real crux of your question is to get the paperwork right. That means doing a formal dividend waiver IN ADVANCE of each dividend being approved by the Board of Directors. If you do a google search on dividend waivers, you'll find a host of information about how to do it and the correct form of the paperwork involved. Apart from making sure the paperwork is right, you also have to show that the proposed dividend could have been paid to all shareholders if it weren't for your waiver. For example, if the company has £10k in reserves and you each have 50% of the shares, you can "waive" your £5k dividend, but your partner can only have his £5k - he can't have yours as well to give him £10k. Of course, that leaves £5k in the company, so in a couple of months time when the company has earned another £10k, it has £15k in reserves, and can pay £7.5K to your partner if you waive yours, and so on.
Another alternative would be changing the memo & articles to facilitate alphabet shares instead of equal right ordinary shares. You'd have B shares, your partner would have A shares. You'd vote a dividend of £10k to A shares and £nil to B shares. Just watch out for the settlements legislation - S660 etc - as if you're not legally married, you won't be protected by the inter-spousal transfers exemption so could fall into the settlement legislation traps - you'd need to do some research.
There's absolutely nothing wrong with monthly dividends - ignore those scaremongers who say otherwise. If you've got the right paperwork in place, a monthly dividend can't be challenged. It's the "law" that matters and there's no law to prevent it, whatever HMRC inspectors and some accountants may like to think otherwise. There's no such thing as "spirit" - if Govt and HMRC wanted to stop monthly dividends, they could change the law accordingly - monthly dividends have been happening for decades, so they've had plenty of time to stop it, and even if they do change the law, it will only apply to future dividends, not past.
The real crux of your question is to get the paperwork right. That means doing a formal dividend waiver IN ADVANCE of each dividend being approved by the Board of Directors. If you do a google search on dividend waivers, you'll find a host of information about how to do it and the correct form of the paperwork involved. Apart from making sure the paperwork is right, you also have to show that the proposed dividend could have been paid to all shareholders if it weren't for your waiver. For example, if the company has £10k in reserves and you each have 50% of the shares, you can "waive" your £5k dividend, but your partner can only have his £5k - he can't have yours as well to give him £10k. Of course, that leaves £5k in the company, so in a couple of months time when the company has earned another £10k, it has £15k in reserves, and can pay £7.5K to your partner if you waive yours, and so on.
Another alternative would be changing the memo & articles to facilitate alphabet shares instead of equal right ordinary shares. You'd have B shares, your partner would have A shares. You'd vote a dividend of £10k to A shares and £nil to B shares. Just watch out for the settlements legislation - S660 etc - as if you're not legally married, you won't be protected by the inter-spousal transfers exemption so could fall into the settlement legislation traps - you'd need to do some research.
Upvote
0
I absolutely agree with Philips super post.
If you are looking at splitting the shares the company formation agent you used will probably be able to do this for you but as ever take specific advice from your own accountant.
If you are looking at splitting the shares the company formation agent you used will probably be able to do this for you but as ever take specific advice from your own accountant.
Upvote
0
Latest Articles
-
70 years of director bans in six months: Companies House has stopped asking nicelyCompanies House published a release on August 6th 2026 that every company director should read...- Ozzy
- Updated:
- 7 min read
-
MTD for Income Tax: your first quarterly update is due 7 August.If you are a sole trader or landlord and your gross income from self-employment and property was...- maka
- Updated:
- 4 min read
-
Andy Burnham's Manifesto for Small Business, and How It Stacks Up Against Count BinfaceIf all goes to plan (or rather, to Labour's timetable), Andy Burnham will be sworn in as Prime...
- Ozzy
- Updated:
- 5 min read
-
SEO in the Age of AI: What UK Small Businesses Actually Need to KnowTL;DR Search has shifted from "ten blue links" to answer engines, and the click is dying...
- Ozzy
- Updated:
- 11 min read
-
What Carphone Warehouse, Microsoft and Uber Have in Common: They Started in a DownturnThere's a comforting myth that you need a booming economy to start something. Cheap money...
- Ozzy
- Updated:
- 3 min read