From the 6 April 2016 the rules changed in regard to Dividend Vouchers.
Do you now know that the Tax Credit has been abolished and is no longer required on the Dividend Vouchers?
Instead the gross amount will now also be the same as the net amount.
How to pay yourself a dividend
Your first step is to assess the available profit of the limited company, also known as ‘profit + historical retained profits’.
This is the amount which is available for payment as dividends.
Be aware: Historical Retained Profits are the cumulative reserve balance ever since the company was formed.
You will then need to create a dividend voucher. This is a legal document that all companies issue to shareholders.
Dividend Voucher 2016 – template >>here
Once a dividend voucher has been created, you can then actually pay a dividend.
You should be aware that your dividend could be illegal if you distribute an amount higher than is available or if you fail to create a dividend voucher and complete the necessary paperwork.
HMRC may take the figures you have drawn and not documented correctly and claim that they are either a salary or that they are forming a Directors’ Loan, both of which would have negative tax consequences.
You may wish to discuss the tax implications with us, your accountants. We will be able to advise you on how to utilise your tax allowances and help design for you a bespoke tax plan.