Reply To: Company Director – Dividends


I suggest that the dividend should be taken as capital from the date paid. There are different ways accountants deal with these for tax purposes; a monthly company loan payment cleared by a yearly dividend is very common. So you would be back to the very old issue of whether a loan can be treated as income and the old Poupard case law and so on. The UK tax law is so cumbersome that there is no standard way of treating dividends.

So even if there is a monthly payment, it might well be a company loan. The loan is then cleared by a yearly dividend award made tomorrow…the last day of the tax year. Sounds complex? Tax and accountancy and avoiding HMRC treating the money as earnings is usually complex! Perfectly legal and accepted by HMRC as the same tax is paid. They are not interested in anything below a million £.

The other issue is the way dividends are taken into account in the Welfare State in caselaw. No HB case that I know of but loads in other benefits that seem consistent to treat any dividend payment as capital.