When can I take dividends?

[Will Blears]

I am wondering do I have to wait until the end of a company accounts year to take dividends off of the profit or can I calculate the profit during the current year and take dividends from the current year?

Thanks,

 

[STDFR33]

You can produce management accounts and declare an interim dividend if there are sufficient retained profits.

 

[Will Blears]

OK great, I am guessing an accountant would be needed for this sort of thing.

I am expecting a decent amount of money to come through in the next few months so was considering trying to get some dividends for a deposit for a house.

I've read that I can get dividends up to £34,960 based on an income of £8,060 to maximise the amount without going over the next tax bracket, I am assuming the said accountant would be able to advise me on that though.

 

[STDFR33]

You can produce management accounts yourself if you are capable of doing so.

There's no set amount that is most tax beneficial. It entirely depends on the individual circumstances.

 

[@aiteoconsulting]

There is a salary band (between £5,824 and £8,060) which keeps your national insurance record intact, but is not subject to a national insurance charge either for the employee or employer. However as mentioned above, it very much depends on your circumstances - for example, if you're taking a salary elsewhere at the same time.

 

[MyAccountantOnline]

OK great, I am guessing an accountant would be needed for this sort of thing.

.....

Its not essential if you know what you are doing.

It is however essential that your accounting records are accurate and complete so that you can ascertain what dividend can be paid.

 

[MyAccountantOnline]

You may find this helpful.

 

[Clare@ClarityTaxation]

Just to add to the above - go careful about taking "one size fits all" advice on what income you can take, as your own personal circumstances may differ and that can have a big effect. You can in theory take a set amount of dividends and a set amount of salary and pay no income tax or NI, but that assumes you have no other income at all, and assumes it's the most tax efficient option for you. It might not be. Tax rates and allowances change each year too, so make sure the advice you're reading about relates to 2016/17 (the tax around dividends changed significantly recently).

When it comes to expenses you need to ensure they are wholly and exclusively for the purposes of the trade, so again these may differ from what other people can claim.

 

[Spapro]

We run a profit/loss report and balance sheet from Sage each quarter (making sure everything is up-to-date so the reports are accurate).

We then declare/allocate a sensible dividend based on previous quarters performance. This is done without involving the accountat.

Then we do an end of year dividend based on an informal chat with the accountant once he has formalised our year end accounts.

With a quick bit of advice from your accountant about your own personal circumstances you should know quickly what you can take sensibly now if you have up-to-date accounts.