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• # 82287
• Wed 25 Apr 2012 12:59 PM

Hi all,

I have a query that has been bugging me for quite some time now! So I thought I would see if any wise person out there could stop my brain working overtime! I am sure there is a very simple explanation, but I don't just want to assume that what I think is correct, I would rather know for fact!

When a dividend is paid to say a Director, they receive it at 90% (or is it 80%?, well not too worry, that's not what I need answering!) of the full value, the other 10% being tax deducted (this is what I have stored in my head anyway!).

So based on a  Dividend being paid at a figure of £900 and £100 has been deducted for tax;

Question 1 - Is it a case of waiting until the company's year end/ or tax year end, then calculating the total paid out as dividends and calculating tax liability from that?
Question 2 - Leading on from Q1: When and how does this tax get paid to HMRC, is it at the year end/tax year end or other?
Question 2 - Does a Dividend ever get paid out at full value?

My confusion comes from paying dividends to Directors and funds to HMRC, but not actually doing any calculations for this (the Accountant does the 'behind the scenes' part).

I hope the above makes sense!

Many thanks in advance.

Kind regards

Kerry

• www.berrybookkeeping.co.uk
  
  My responses are based on my opinions, not necessarily facts.
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• # 82291
• Wed 25 Apr 2012 03:27 PM

Hi Kerry

Dividends are paid to shareholders (who may also be directors) as a return on their shares. They are paid in cash assuming a 10% tax credit. The tax is the liability of the individual shareholder and is accounted for on their tax return by grossing up the value of the cash received when calculating taxable income. The company does not have to account for the tax on dividends although may calculate the value of the tax credit to record on the paperwork given to shareholders when they are declared and distributed.

Hope this helps

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• # 82294
• Wed 25 Apr 2012 04:42 PM

Georginasaid:

“

Hi Kerry

 

Dividends are paid to shareholders (who may also be directors) as a return on their shares. They are paid in cash assuming a 10% tax credit. The tax is the liability of the individual shareholder and is accounted for on their tax return by grossing up the value of the cash received when calculating taxable income. The company does not have to account for the tax on dividends although may calculate the value of the tax credit to record on the paperwork given to shareholders when they are declared and distributed.

 

Hope this helps

”

• www.berrybookkeeping.co.uk
  
  My responses are based on my opinions, not necessarily facts.
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