Dividend Gross or Net Plz help

[zzzindagi]

Hi Guys,

I have been drawing dividend from my business account every month.
I want to know that whether Ho will consider that full amount as my earning which i have been drawing as dividend

or They will consider my earning after deducting tax from the dividend.

for example. if i have transfered 10,000 to my personal account from my business account as dividend.

Can i claim 10,000 dividend as my earning or i have to deduct tax and then claim points for the remaining amount.

please help . Thanks

[silverline]

Gross dividends are fine as long as they were paid out of NET PROFIT AFTER TAX OF THE COMPANY.

[zzzindagi]

Gross dividends are fine as long as they were paid out of NET PROFIT AFTER TAX OF THE COMPANY.

No it was paid out after deducting expenses from the business and i will pay tax on my dividends. But there is still some increase in the company's balance amount after deducting expenses and paying out dividend.

for example. If my sales are 1800 and expenses are 100.
so the balance is 1700 which is my profit.
I kept 100 in my business and transfered 1600 as dividend.

My question is, can i claim 1600 as my earning and then pay tax on that amount later.

[silverline]

Are you self employed or working through Ltd company?

[zzzindagi]

Are you self employed or working through Ltd company?

I am working through Ltd Company and i am the only owner of the company.

[silverline]

1700 are pre tax profits.If you corporate tax turns out to be 200. then maximum dividend you can take is 1500 (1700-200). You got to pay further withholding tax when you pay dividend to yourself e.g. 150. So you should actualy receive 1350 (1500-150) in your personal bank account as dividend. But you can claim points on gross dividend value i.e. 1500.

If you have taken 1600 out of business. only 1500 will be deemed as dividend and the 100 will be taken as return of capital.

Dividend amount =< Accumulated profits

[zzzindagi]

Silverline, Thank you very much for giving this valuable information.

This means that what i have been doing was totally wrong. I actually tranfered Profit after deducting exp to my personal account as dividend.
I thought i can pay tax on dividend after that but actually i should have paid tax from my business and then transfered the remaining net profit as dividend.

Please let me know how can i rectify this error now. The whole tax money is now in my personal account how should i put that tax money back to my business account and pay the tax through company.

At the same time i dont want to make my case too complicated for CW.

[silverline]

Firstly, you need to ascertain your tax value. Do you have an accountant? Your accountant should be able to sort this out. You should handle this carefully and not make your case over complicated.

[sshah20]

if your company is new then you will liable for corp tax after 19 months. its up to you that you pay corp on monthly basis or pay it on due date.

[John]

Can i claim 10,000 dividend as my earning or i have to deduct tax and then claim points for the remaining amount.

Neither! Every time a UK company pays a dividend a Tax Credit of one-ninth of the dividend gets added. So if the dividend is £10000, the Tax Credit is £1111.11, and thus the income for tax purposes is £11111.11.

You are passing a resolution of the Board of Directors before paying the dividend, aren't you?

[srikumarcs]

The dividends that you pay yourself (as sole director I assume)should fall within the company profits. This includes the tax credits. The home office looks for the following information as a general guidance..

1: Company profits - this would exclude salary, expenses
2: Dividends taken after the company profits are established. Like silverline said, it should be <= company profits. When I say dividends, I mean dividends with tax credits on them.
3: Dividend vouchers that you issue as the sole director of the company mentioning the dividend amount and tax credit in the dividend voucher
4: Dividend declaration, specifying that you held a meeting at some date of every month and agreed to pay yourself a dividend of £x and a tax credit of £y.

Its best you hire an accountant who can offer some sound advice on this. Looks you created a "boo-boo" with your dividends. I am sure there are work arounds for this which a good accountant will know about
And oh!! make sure that the accountant you choose is a member of one of the following organizations -

(1) The Institute of Chartered Accountants in England and Wales (ICAEW),
(2) The Institute of Chartered Accountants in Scotland (ICAS),
(3) The Institute of Chartered Accountants in Ireland (ICAI),
(4) The Association of Chartered Certified Accountants (ACCA),
(5) The Chartered Institute of Public Finance and Accountancy (CIPFA),
(6) The Institute of Financial Accountants (IFA), or
(7) The Chartered Institute of Management Accountants (CIMA).


Its not a must (though its specified in the policy guidance on UKBA website), but it certainly helps.

Good luck ..

Sri

[sk.sunshu]

HI This is Sharath, I am applying for my Tier -1 Extension. I am operating my Limited company. Showing the funds in the form of salary and Dividends. UKBA policy guidance point 115(V) says the dividend voucher should show NET and Gross dividend but they dint mention what they will consider. I would be thankful if some clarify about this for Sure.
I read many posts, some say Net and and Some say Gross.

Please help me, if any one been to interview recently.

Thanks
Sharath

[adityaisukapalli]

Thanks
Sharath

GROSS dividend is your income. Read policy guidance.

[sk.sunshu]

Thanks
Sharath

GROSS dividend is your income. Read policy guidance.

HI Aditya,
I read the policy guidance 3-4 times, at no point they said that they will consider gross dividend. They are asking that the dividend voucher should show both net and gross dividend amounts thats all.
Do you know any one who secure the extension based on gross dividend. See my case if I go with net i am short of £300, if UKBA consider gross I am safe with £1500 extra.

thanks
sharath

[tier1_aspirant123]

i used gross(net +tax credit) and got my tier 1 extended. i had claimed 80 points and got 80. if the case worker had considered net then i would have got 75