Dividend and Directors Remeunaration

[ishfaqsangra]

Just gone through a thread where someone commented dividend is included in remeunaration.
If company generates profit then how it can be included in Directors own remeunaration?
Salary I understand comes under directors remeunaration.
Please someone clarify!

[ishfaqsangra]

Everyone discussing salary why not dividend clarification.

[dd156]

Legally, dividends are given to shareholders only out of profits.
I don't think it can be counted as director's remuneration.

[ishfaqsangra]

@zimba any comment please as I guess you mentioned it as remuneration in any thread.
Apologies if I m incorrect

[zimba]

@zimba any comment please as I guess you mentioned it as remuneration in any thread.
Apologies if I m incorrect

Yes it is remuneration if paid to a director but any dividend paid from your profits will not affect you investment.

[ishfaqsangra]

Thanks Zimba.
As I understand dividend is paid out of profit after paying the corporation tax.so if I m the only director and my company generates a profit of say 15000 .Company pays 3000 corporation tax and rest 12000 paid as dividend to the only director and all shares holder.will that be counted as remeunaration?please explain a little bit taking out your valuanle time as I m in a fix what to do.
I have to take one or the other for survival I m expecting profit at the end of my 3rd year accounts and I have already taken over 10000 as salary in the last 2 years.

[zimba]

You are totally confused as if remuneration is evil. Anything paid from the company to your as a director is remuneration including expenses. as long as this does not come from your investment you are fine

[dd156]

Does it include reimbursement out of pocket expenses? I was under the impression that it's just taxable benefits that are added on.

[zimba]

Does it include reimbursement out of pocket expenses? I was under the impression that it's just taxable benefits that are added on.

From HO perspective, taxable or not does not matter. Remuneration is defined as payment or compensation received for services or employment and includes base salary, any bonuses and any other economic benefits that a director receives. This could be any benefits like travel expenses, training, food, Amazon prime membership,... etc which are paid by the company for the benefit of the director. Ask your accountant for more information.
According to the rules, any director's remuneration will not be counted towards your investment if it comes from your original investment/cash.

[dd156]

Ok, thank you.I travel a lot around the city for work when the service is being provided at the customers' premises, and I claim for travel in this case as the service cannot be provided without going to the customers' premises.

[alex87]

Does it simply include everything processed through payroll?

[zimba]

Does it simply include everything processed through payroll?

No, just the Director's salary

[alex87]

Hi Zimba

Yes, I mean everything paid out to the director through payroll?

[zimba]

Hi Zimba

Yes, I mean everything paid out to the director through payroll?

Yes that is remuneration and if it comes from your investment, it will be excluded by HO for award of points

[midas5]

^^
So we also have to submit our payslips to show how much the business paid us as directors? If not, how are we expected to tell them if it is not obvious from the accounts?

[zimba]

^^
So we also have to submit our payslips to show how much the business paid us as directors? If not, how are we expected to tell them if it is not obvious from the accounts?

No. Directors remuneration should be clearly shown in the accounts.

[dd156]

I asked my accountant and he said that if a payment is reimbursed as a business expense, then it's not remuneration. E.g. Business travel expenses incurred in providing the service. However, any reimbursement for your payments that the business isn't befitting from, it's remuneration. E.g. You might be reimbursed for your personal travel expenses, which is a benefit received. All dual expenses that are both for personal and professional use, like your home broadband or mobile expenses in your name, are also remuneration. He said dividend is remuneration but, of course, legally can only be paid from profits.

[zimba]

I asked my accountant and he said that if a payment is reimbursed as a business expense, then it's not remuneration. E.g. Business travel expenses incurred in providing the service. However, any reimbursement for your payments that the business isn't befitting from, it's remuneration. E.g. You might be reimbursed for your personal travel expenses, which is a benefit received. All dual expenses that are both for personal and professional use, like your home broadband or mobile expenses in your name, are also remuneration. He said dividend is remuneration but, of course, legally can only be paid from profits.

That is exactly what I meant. Anything that benefits you as a director is remuneration. Business expenses are business expenses.