If you have any retained profit in your limited company, these funds may be distributed as dividends to the company’s shareholders.
Once the director (s) decide to make an interim dividend payment, the declaration must be recorded in the company’s board meeting minutes.
The company must also provide each shareholder with a dividend voucher.
The voucher is a ‘receipt’ that should be kept in a safe place. It will be needed to complete the annual self-assessment form.
With the ubiquity of web-based accounting systems, directors are not required to send shareholders a physical dividend voucher if it can be delivered electronically.
Electronic vouchers should still be clearly dated and stored securely for future reference.
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 on 6th April 2016 with a simpler system of dividend taxation.
What information should a dividend voucher contain?
Limited company name and registered address
Company registration number (optional but useful for identification)
Shareholder’s name and address
Description of security (e.g. “Ordinary Shares”)
Number of shares owned at the time of declaration
Tax year the dividend relates to
Amount of interim dividend paid
Date
Signature of company officer (typically a director)
We’ve provided an example dividend voucher template below:
Dividend voucher
Company Name & Address
Interim dividend of £X per Ordinary Share in respect of the financial year ended Year End Date payable to shareholders registered at the close of business on Date.
Shareholder Name & Address
No. of shares ________ Dividend Payment: £ ________
Signed By: _____________________ (Company Director)
Date
This voucher should be kept in a safe place.
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 chairman, or sole director).
If you are in any doubt, your accountant can easily advise you on the format of such minutes.
Failing to document a dividend properlycan result in HMRC treating the payment as salary, which could attract PAYE and National Insurance liabilities.
Here is a standard board meeting minute template, which you can use.
Board meeting minutes
Minutes of a meeting of directors of Company Name Limited held at Address on Date
Present: Names of Attendees
It was resolved that an interim dividend of £X per Ordinary Share in respect of the year ended Year End Date be declared and made payable on Date to shareholders registered at the close of business on Date.
Signed By: _____________________ (Chairman or sole Company Director)
