Tax year or Accounts Year?

[stclare]

Hi, this is probably a very simple question for most, but I can not seem to find the answer on line so I am hoping you can help.

Is the tax paid on dividends calculated based on my company accounts year Sept-August or on the tax year April to April? or even more confusing none of these.

Thank you for your help.

 

[DWS]

In a tax year, April to April

 

[stclare]

In a tax year, April to April

Thank you.

 

[Spur Support Services]

Dividends are taxed in the hands of the recipient and therefore taxed within the submission of the income tax return based on the YE 5 April.

But bear in mind that in order to issue dividends you will have generated company profits after corporation tax, and the company profits are taxed in line with the Companies Accounting year (August).

Dividends can be paid out of Retained Profits after tax, both brought forward and current year, but a dividend cannot be legally paid without Accumulated Retained Profits after Corporation Tax.

So when you are considering dividends and cashflows you need to have an idea of the corporation tax arising on the current year profits,

This is why I always like my clients to use Xero accounting software to keep their records up to date and allow us to have a conversation early in the final month of the Company's Financial Year, to ensure that tax and dividends are considered correctly