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) have decided 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’ which 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, there is no requirement to send shareholders a physical dividend voucher, if it can be 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 on 6th April 2016 with a simpler system of dividend taxation.
Dividends are taxed as follows (2023/4 tax year):
- Basic rate band (£12,570 – £50,270) – 8.75%
- Higher rate band (£50,271 – £125,140) – 33.75%
- Additional rate band (£125,141 +) – 39.35%
For further details about what dividends are and things to bear in mind, read our guide to limited company dividends.
What information should a dividend voucher contain?
- Limited company name and registered address
- Shareholder’s name and address
- Description of security (e.g. “Ordinary Shares”)
- Number. of shares owned at the time of declaration
- Amount of interim dividend paid
- Signature of company officer (typically a director)
We’ve provided an example dividend voucher template below:
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)
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 will be able to advise you on the format of such minutes with ease.
Here is a template of a standard board meeting minute template, which you are welcome to 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)