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Dividend Declared split

split of dividend

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Director A does not receive a Directors salary from the company.

So rather than director A  receive an amount through the company payroll he receives it via dividend.

So once this amount has been deducted from the total dividend voted, the balance of the remaining dividend is then distributed proportionally to the shareholders.

in this situation the only way i can see it possible is if there are different classes of shares are issued to share holders (who are also directors).

unless i missing something?

 

thanks

 

 

 

 

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By craigleeds
06th Jul 2020 13:36

If salary was declared separately to other dividends. Other Directors could waive their rights to this dividend and sign a dividend waiver.

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By sparkler
07th Jul 2020 12:44

Do remember that the company must have sufficient reserves to justify the dividend "in lieu of salary" for all shareholders, even though the other shareholders intend to sign a dividend waiver.

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By Tax Dragon
07th Jul 2020 13:14

Such problems don't arise if salary is paid as salary. Do remember (as Wilson notes) that attempts to pay salary as something else leaves it open to HMRC to identify those amounts as salary and then to collect the tax that would have been due under PAYE. If that happens, there may be a larger overall tax cost than had the salary been recognised as salary when paid.

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By sparkler
07th Jul 2020 13:27

Indeed!

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Psycho
By Wilson Philips
06th Jul 2020 13:45

Pray that HMRC do not recognise the company, with such talk of “salary via dividend”, “notional salary”.

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By johngroganjga
06th Jul 2020 16:49

Yes - strictly speaking there must either be different classes of shares, or valid waivers.

But if there are neither here, this would not be the first time I have come across a company which thinks it can vary dividend payments by agreement alone.

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By Wanderer
07th Jul 2020 13:14

Martymcfly wrote:

Director A does not receive a Directors salary from the company.

So rather than director A  receive an amount through the company payroll he receives it via dividend.

So once this amount has been deducted from the total dividend voted, the balance of the remaining dividend is then distributed proportionally to the shareholders.

in this situation the only way i can see it possible is if there are different classes of shares are issued to share holders (who are also directors).

unless i missing something?

 

thanks

What you are missing is that Director A's payment is in fact a salary that should be paid under PAYE.
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