Dividends

Dividends

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I am actually helping a friend with a Ltd Company and I thank you in advance for responding to my question. I am a qualified Accountant with Industry experience, her accounts are straight forward as she is getting a salary, claiming mileage, some expenses but I have little knowledge of taxation. My friend`s Ltd Company year end is 31 March 2013 and she has declared a dividend of £25,000 on 28 December 2013. The company net profit after Corporation tax for the year ended 31 March 2013 is £40,000 enough to cover the dividend. I would like to know which year does the Director file this dividend on her SA returns? At the moment she is not sure whether she should declare the Dividend on the SA returns for current tax year ending 05 April 2013 or 05 April 2014? I will appreciate if you can help me on this one. 

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By johngroganjga
08th Jan 2014 07:45

Not sure why anyone would think that a dividend received in 2013/2014 would be taxable in 2012/2013!

Suffice it to say that a dividend received in 2013/2014 is taxable in that year and should be entered on the recipient's tax return for that year.

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Stepurhan
By stepurhan
08th Jan 2014 08:34

Helping a friend

If you don't have the appropriate experience to answer questions like this, perhaps it is a good idea to suggest she gets an accountant who does. Trying to do this without vital relevant knowledge may end up hurting your friend. Ensuring her affairs are in the hands of a professional with the relevant competencies would be truly helping them. .

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Replying to Kevkava:
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By FRAS
08th Jan 2014 14:18

Thanks for the advice, I will tell her.

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Euan's picture
By Euan MacLennan
08th Jan 2014 10:10

Common misconception

There is a common misconception that a dividend declared in respect of an accounting year of a company should be included in the shareholder's income tax return for the tax year in which the company's accounting date falls.

In fact, although quoted PLCs always talk about interim and final dividends for an accounting year, dividends are not declared out of the profits of a single accounting year - they are declared out of retained profits accumulated over the years up to the date the dividend is declared and the only relevant date for a shareholder's income tax return is the date of payment of the dividend.

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