What paperwork do you need to keep?
All dividends should be approved at your Board meeting and the relevant Board minutes recorded to reflect this (Remember to file your Board minutes in your Statutory records). Once the interim or final dividends have been approved you must prepare a Dividend Voucher for every shareholder. Although the voucher does not have to be as fancy as those produced by publicly listed companies, there is a standard format with certain expected information you should include. We suggest that you follow the following format:
(insert company name)
(insert company address)
(insert shareholder’s name)
(insert shareholder’s address)
Dear (insert shareholder’s name)
Dividend for the period ending (insert your financial year-end)
I give below the details of the dividend payment made to you on (insert date).
Number of shares: (insert number of shares) Ordinary (or, if other, specify type) shares
of ……………….. (insert nominal value) each.
Dividend rate: (insert percentage or pence per share)
Total dividend payable for the period ending (insert date): (insert figure)
Remember to keep this voucher with your tax records. It supports the dividend entries you make on your self-assessment tax return.
On behalf of (insert company name)
How frequently can you issue Dividends?
Provided you have sufficient profits and have prepared the proper paperwork, you can issue dividends whenever you want to. We would advise against drawing the same amount on a regular basis however as this may be challenged as being a quasi salary, especially if you have made a mistake in calculating available profits. If dividends are successfully reclassified as a salary HMRC will expect tax and NI to be paid on these accordingly.