Limited Company - Hi, I need to pay the Company Director £4k in dividends for last year, what's the best way to do this? Do I just issue him a cheque and would I record this is as a company expenditure? Would he need to declare it on his self-assessment tax return?
Dividends are recorded on the date they are paid. You issue a cheque or pay by BACs is that is how you pay him. Dividends are payments out of equity and not deducted before arriving at the profit and loss. They are deducted after the profit and loss when arriving at shareholders capital. He does declare it on his SA return. You declare the whole £4K but the first £2K is exempt. The payment would go on his 2020 SA return and is taxable at 7.5% if he is a basic rate payer and 32.5% if he is a higher rate taxpayer