My husband is trying to pay himself dividend. When he register his company he hold one share. first time he pay himself £1000(one share). If he want to pay himself more. What should he do? Make more Dividend voucher?
Do not pay dividends too regularly otherwise HMRC willtry to deem them to be salary.
If there is only one share issued then the person with the one share has 100% of the rights to the dividend no matter how much the dividend is for. The shares are not vouchers worth a certain amount of dividend each.
Note that dividends can only be paid from profits. He will still be paying corporation tax on the dividends.
Before paying any dividends though as a one man limited company he needs to ensure that he is not caught under IR35 legislation which regards dividends paid as deemed salary (so one pays tax, empe and empr on them just the same as any other salary).
kind regards,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
I know people that have been on the wrong side of that one Matt!
This is one of those cases where all of us, including Rob are right.
The way that many accountants work around it is to declare a dividend to the DLA and then the director takes the money from that (or even the director takes the money from the DLA and then a dividend is issued to clear the DLA before the period end).
The key is always to remember that those nice people at HMRC hate people taking dividends and they are geared towards making the life a misery of any one man band that does.
Of course, the flip side is that their not approving of people taking payments in that way is a no never mind as people are acting completely within the law and tax regulation whether they like it or not.
Unfortunately IR35 clouds the water by giving some power to the chip they have on their shoulder in relation to payments made in this manner.
Now thats a funny old reply isn't it where I'm basically saying that everyone is right, lol.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
