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Dividend Distribution

I work for a small company with a turnover of £2m.

The company is run by a small team of shareholding directors.

They are looking to issue a dividend sometime in the next few weeks. However, for some shareholding directors it would be better to be paid a divi before the 6th April while others would perfer after 6th April.

So my question is, for the same share class (ther is only one share class in this company) if the dividend is paid before the tax year end, can some shareholding directors delay their dividend until the new tax year?



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You can do it ...

... using waivers, but they need to be executed properly and take account of the effect on available reserves.

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Agree with BKD, the important date is the day the dividend is declared - it does not have to be paid on the same day, but the declaration date is the date for tax purposes.

If the shareholders agree a dividend today that is not paid until 10 April '13 it should still be taxed in the 2012/13 tax year.


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If I understand correctly, two dividends could be declared provided there are enough reserves, The first dividend could be declared before the tax year end and shareholder A can waive the rights and sharholder B could take the dividend, and then another dividend could be declared in the new tax year in which shareholder B can waive the rights and sharholder A could take the dividend?


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But do it right - a search on "waiver" ought to steer you in the right direction if you're unsure of what's required.

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Thanks BKD,

It looks like the waiver option is somewhat fraught with pitfalls and dangers and can be challenged by HMRC.

I think I'll consult a tax expert on how exactly to do it, or opt for a different set of share classes.

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