Company Dividend Over Paid

Company Dividend Over Paid

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Hi All,

I suspect there is no solution to this mistake I have made but it doesn't harm asking...

I have a company with a 31 March year end.  At year end I eliminated a small balance in the director loan account by transferring money back into the company, and declared a final dividend out of available profits and paid this money out of the company.  All cash moves were made prior to 31/03.  Somehow I stuffed my calculations up and have paid myself a dividend that is too large, not in terms of available profits but with regard to my personal tax for year ended April.

I have stopped trading through the company and plan to pay myself the remaining retained earnings as a dividend this tax year and close the company, and because I have stopped trading this will be beneficial with regard to personal tax.  Basically was attempting to spread the final retained earnings (and cash remaining in the company net of corporate tax owing) over two personal tax years.  BUT I should have paid myself 6k less last year and 6k more this year....really simple error.

The only way I can think of is reducing the dividend paid is by creating a director loan balance as at year end (as mentioned, the cash left the company into my personal account), thereby decreasing the dividend declared.  What are the tax implications of doing this?  Is it legal?

I personally like to clear out any director loan balance at year end (generally don't use the loan account except where I pay company expenses personally and when I accrue wages but forget to actually pay myself the cash, and sometimes lend myself some cash when I haven't kept the books up to date during the year!?).

What are the implications of having a director loan balance as at year end?  As mentioned, the balance would exist as at 31/03 (company year end) and then I would pay myself a dividend in the current personal tax year, say today 15/04, and pay the loan back immediately.

Or is there another solution?  As much as I am annoyed at myself, this 'extra' dividend being taxed at 32.5% is more annoying, even though I had resolved myself to believing it was adequate punishment for being so silly...

Thanks

Paul

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