If you have any retained profit in your limited company, these funds may be distributed as dividends to the company’s shareholders.
Once you have decided to make a dividend payment, the declaration must be recorded in the company’s minutes, and you must also provide each shareholder with a dividend voucher.
The voucher is a ‘receipt’ which should be kept in a safe place – it will be needed to complete the annual self assessment form.
With the increased use of web-based accounting systems, there is no requirement to send shareholders a physical dividend voucher, if it has been delivered electronically.
How are dividends taxed?
Before April 2016, a system of dividend tax credits existed, whereby dividends were ‘grossed up’ by 10/9 to produce the gross dividend figure upon which dividends were taxed. This decades-old system was scrapped from 6th April with a far simpler system. This article has been updated with this in mind.
For further details about what dividends are, and how much tax is payable on them, visit our guide to limited company dividends.
What information should a dividend voucher contain?
1) Limited company name and number
2) Shareholder’s name and address
3) Description of security (e.g. “Ordinary Shares”)
4) No. of shares owned at time of declaration
6) Amount of interim dividend paid
8) Signature of company officer (typically a director)
We’ve provided an example dividend voucher below:
Limited Company Name
Limited Company Registered Address
The board of directors of YOUR BUSINESS LIMITED met at [YOUR ADDRESS] on [DATE] and declared an interim dividend of £X per Ordinary Share in respect the financial year ended [YEAR END DATE] payable to shareholders registered at the close of business on [DATE].
No. of ORDINARY SHARES:
Company Director or Company Secretary (if applicable)
The Company board meeting minutes
By law, the limited company must keep a record of the dividend declaration via board meeting minutes, signed by an officer of the Company (a director or company secretary if you have one).
If you are in any doubt, your accountant will be able to advise you on the format of such minutes with ease.
You will typically include a statement in the board meeting minutes, such as this one:
“It was resolved that an interim dividend of £X per Ordinary Share in respect of the year ended [YEAR END DATE] be declared on the Ordinary shares and payable on [DATE] to Ordinary shareholders registered at the close of business on [DATE].”