Dividend split for a new shareholder

Dividend split for a new shareholder

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Hi. I have a client who is a Ltd company. He is the only shareholder currently and year end is 30th June. He would like his wife to become a 33% shareholder in order to pay her some dividends. If we submitted the application to allocate her some shares dated 01/06/2013, would I be able to pay her the same amount of dividends as the original shareholder.

Ie- Total profit £50,000. Can I just split it like this, original shareholder now 67% £33500 and her 33% £16500

or do i HAVE to date apportion it, ie - 11 months profit £45833.33 and 1 month profit £4166.67

original shareholder £45833.33 + (4166.67 / 100 x 67 = £2791.66) = £48624.99

and new shareholder 4166.67 / 100 x 33 = £1375.01

just to be clear it is husband and wife so they are not bothered who gets what exactly, it is just a way to use up her dividend tax threashold and for him to not go into 50% tax band.

just unsure whether you have to split it all like this or not,

thanks.

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Euan's picture
By Euan MacLennan
20th Jun 2013 11:06

This is very basic

Dividends are declared equally (subject to any waivers) to all shareholders on the register at the relevant date.  If the wife is a shareholder when the dividend is declared, she will get the same dividend (rate) as her husband.

The year-end date is irrelevant, as is the period in which the profits were earned.  It is necessary only to have sufficient retained profits after allowing for tax to cover the dividend when it is declared.

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Replying to ms998:
By Ashlea
20th Jun 2013 10:13

Thank you. wasnt too sure and i think i over though it all. Much appreciated.

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