This post is intended as a guide only, for more in-depth and detailed information, please visit the link below or to contact your accountant or financial advisor for more information and/or advice.
Plan for Dividends:
The best way to plan for the dividends is to make management accounts for every quarter in order to analyze the net profit and then transfer the right amount as dividends. But practically that would raise the administration and the cost as well.
Predict the Number of Dividends:
The right way to predict the amount of dividends is to analyze the Net profit on a monthly basis by deducting the Monthly expenses from the Monthly Income and taking 80% as dividends of the amount of monthly Net profit.
Maximum Dividends:
The maximum dividends you can take under the basic rate in this tax year 2022-23 is £ 52,270 (If you haven’t utilized your personal allowance which is £ 12.570) including the dividend allowance which is £ 2000 and this amount is taxable under the basic rate which is 8.75%. Any excess amount other than £ 52,270 will be taxable at 33.75% (higher rate) and over £ 150,000 will be taxable at 39.35% (additional rate).
Please note that there will be no restrictions on the time and amount of transferring the dividends. You can transfer monthly, quarterly, or even one-off by the end of the tax year but before 5th April to be considered in the same tax year.
If you are a shareholder:
If you have a 50% shareholder in your company then you have to transfer the dividend amount on a proportionate basis. After the end of the financial year, the company will transfer the remaining balance as dividends if you withdraw more than estimated.
That’s pretty much all of it please do let us know if you have any questions.