IT Contractor FAQs - Frequently Asked Questions

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How much money can I distribute in dividends?

Posted Aug 10, 2009

Limited company contractors will pay themselves in the form of a salary plus dividends.

Dividends can be distributed to shareholders when there is retained profit.

Retained Profit is any profit in the limited company that has not already been distributed by way of dividends, so this may be from the current and prior financial years.

The retained profits can be calculated on regular basis in management accounts that are prepared by the company before the financial statements are prepared by your contractor accountant.

During the financial year of the company, "interim" dividends can be paid, followed by a "final" dividend paid after the financial statements for the year end are finalised.

A director can distribute dividends whenever they so see fit, taking into account the health of the company and future obligations.

Further Information

- What are limited company dividends?

- How much tax do you pay on limited company dividends?

About the Author

This answer was kindly provided by Phil Richards from BFCA Limited Chartered Accountants.

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