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Is there a limit to paying a dividend

Is there a limit to the amount that can be paid to a director as a dividend

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I operate as a consultant and for the past few years have not resided in the UK. I have money in the ltd company that has been subject to UK tax laws and corporation tax was paid. I have not taken any salary from the company this year but with around 200k sitting in the company i was looking to pay myself a 150k dividend. I paid a small dividend last year and it was classed as disregarded income, i have queried my account if a larger dividend is allowed with no tax liabilty, he states there is no limit mentioned in HMRC advice. Does anyone know any different to that ?

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RLI
By lionofludesch
19th Jan 2022 14:35

How will it be taxed in the country where you do reside ?

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Replying to lionofludesch:
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By swampydrill
19th Jan 2022 14:47

It won't, im not an official resident and dont spend more than 183 in country due to work in numerous countries.

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Replying to swampydrill:
By ireallyshouldknowthisbut
19th Jan 2022 15:29

swampydrill wrote:

It won't, im not an official resident and dont spend more than 183 in country due to work in numerous countries.

So in the UK then? Just guessing its very hard to be nomadic.

I seem to recall you posted before with similar questions.

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By AndyC555
19th Jan 2022 14:37

You can't pay a dividend above £100k as that's when you start to lose your personal allowance.

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Replying to AndyC555:
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By AndyC555
19th Jan 2022 14:39

Not really. I just made that up as an illustration of why it's better to get paid for advice rather than relying on a random bunch of strangers who might have no idea or ideas that are decades out of date.

Any reason why you don't believe your accountant?

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Replying to AndyC555:
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By swampydrill
19th Jan 2022 14:46

Thanks, i never said i dont believe him, he just stated he could not see a limit mentioned. I dont want to pay a large dividend and then get hit with a large tax bill when i didnt think there would be one. I am awaiting a teams call with a paid accountant about a number of items but just wondered if anyone knew.

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Replying to swampydrill:
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By Hugo Fair
19th Jan 2022 15:01

Hmmm ... and how do you expect the "call with a paid accountant" to go when you inform them that you were told differently on a public forum (by people who don't have access to the details of your personal circumstances)?
Not really the best way to start/maintain a relationship with a professional adviser, is it?

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Replying to Hugo Fair:
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By swampydrill
19th Jan 2022 15:12

I asked a simple question, was there a limit and its been explained there is no limit as long as there are profits, it will still be a question i ask him as i pay for 1 hour

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Replying to swampydrill:
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By Hugo Fair
19th Jan 2022 15:21

It's not the complexity/simplicity of the question (or indeed your right to ask it) that I was questioning. It's simply that if "it will still be a question i ask him", then I don't see what you gain by asking here first?

* If all the answers here agree with his response, then fine but pointless.
* If all the answers here disagree with his response, then what have you learned?
* And if all the answers here disagree with each other ...

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Replying to Hugo Fair:
RLI
By lionofludesch
19th Jan 2022 15:24

Actually, it's whether the question raises other questions.

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Replying to swampydrill:
RLI
By lionofludesch
19th Jan 2022 18:09

swampydrill wrote:

I asked a simple question, was there a limit and its been explained there is no limit as long as there are profits, it will still be a question i ask him as i pay for 1 hour

An hour? It's great that you'll have an in-depth review of your affairs.

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Replying to lionofludesch:
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By swampydrill
19th Jan 2022 20:55

No need for sarcasm, i dont need a full review of my financials so an hour is just fine with the guy who last time was very helpful.

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Replying to AndyC555:
Caroline
By accountantccole
19th Jan 2022 15:35

At that level as a non resident they would be on income disregard rules and lose the PA anyway

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By SteveHa
19th Jan 2022 14:49

A director is not entitled to any dividend at all, and so the upper limit is NIL.

Dividends can be paid to shareholders, in accordance with the articles of the company, but notwithstanding that, and assuming that the company has sufficient reserves, there is no limit.

Whether or not maximising dividends paid to shareholders is the smart thing to do is a different matter.

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By Tax Dragon
19th Jan 2022 15:05

Has anyone thought about NRCGT in these cases?

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Replying to Tax Dragon:
RLI
By lionofludesch
19th Jan 2022 15:25

Tax Dragon wrote:

Has anyone thought about NRCGT in these cases?

Well, there's you. Apparently.

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Replying to lionofludesch:
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By Tax Dragon
19th Jan 2022 15:31

You're quite right.

Revised question: has anyone else thought about NRCGT in these cases?

(btw, like you I wonder about UK residence - which would obvs render NRCGT irrelevant. Wondered that on OP's last thread. Just CBA to raise the issue.)

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Replying to Tax Dragon:
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By Hugo Fair
19th Jan 2022 16:54

CBA is definitely the point that I've reached ... especially after a detour through OP's scintillating threads over the last 7+ years.

On the positive side these are consistent (no mention of what the business does, but always loadsa money sitting idle in it and no idea what to do with it - although apparently he 'doesn't need it' because he's a nomad ... recently in Mexico).

He's been asking "What sort of other options are there for using limited company money?" and their ilk (whilst stating he's a non-resident in a vague way) for so long that I wonder if it's the same money all the time ... but musings like this aren't going to help any of us.

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Replying to Hugo Fair:
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By Tax Dragon
19th Jan 2022 17:31

Yeah - hence I thought I'd bring in a tax technical query (that's all I know, really), the answer to which may or may not be of any relevance to the OP, just to liven things up a bit, on the interaction of CGT and income tax.

Normally, you don't need to worry about CGT when income tax applies (for example on the sale of trading stock). But if you remove the income tax charge, a question arises over whether you open the door to a CGT one.

There was a debate now lost in the mists of Aweb on just such a situation - the transfer of whisk(e)y barrels to a newco. There's a disposal for CGT but, by default, you can ignore that because there's an income tax charge. An election was available to remove the income tax charge, but no election exists for CGT. Question was, would removing the income tax charge trigger the CGT one? No-one could clearly show that CGT would not be due [IMHO, it would be]. IIRC, wvm waved his arms around a bit to justify not disclosing the gain, but the argument wasn't really based in any law I could recognise.

Same question here. Actually a series of questions, of which the leading two are: Is there a [deemed] disposal (you've got cash in your pocket and the asset it came from is diminished in value)? And, if so, and you disregard the receipt of cash for income tax, does it [potentially] come into charge for CGT?

Whatever happened to wvm?

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Replying to Tax Dragon:
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By Hugo Fair
19th Jan 2022 17:41

wvm appears to have joined Les Disparus.
But for the rest you're right (of course) - although I doubt you'll pin down OP for long enough to get to the interesting bits ... guess it goes with the nomadic lifestyle!

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Replying to Hugo Fair:
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By Tax Dragon
19th Jan 2022 17:50

It's OK - I wasn't looking to advise the OP on his/her specific situation. My question was (forgive me sounding like a freeloader OP myself now!) one of general principle.

I suspect Lion's answer stands. It won't have been considered by (m)any in here. So... consider it idle dragonian speculation.

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Replying to Hugo Fair:
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By I'msorryIhaven'taclue
19th Jan 2022 19:47

Hugo Fair wrote:

wvm appears to have joined Les Disparus.

I too am lost!

What the Jack Daniels is a DVM? I'm not fond of new road signs.

Incidentally, TD, have you twigged that Tallulah has left the building? Isn't it marvellous that you can now re-punctuate and sort out your typos without having your post suspended for 24 hours pending scrutiny?

I wonder whether she's taken the naughty chair with her!

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Replying to I'msorryIhaven'taclue:
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By Hugo Fair
20th Jan 2022 01:41

dvm (lower case) was a member whose profile has transmogrified into the infamous 'Oops' style. I'm sure TD can expand should you wish.

BTW how do you know that Tallula (without a final h) has left the building?
Her profile is still live ... although recent admonishments (and even thanks!) have emanated from others, so you may well be right.

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Replying to Hugo Fair:
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By I'msorryIhaven'taclue
20th Jan 2022 09:45

Hugo Fair wrote:

BTW how do you know that Tallula (without a final h) has left the building?

Ahha, dvm. Thank goodness, I thought it might be yet another HMRC initiative that I hadn't heard of but everyone else seems to know all about.

Tallula... well I haven't been ticked off for ages, and can now amend a post without it disappearing for 24 hours' moderation. So I put two and two together. You can always catch up with her on Linkedin.

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Replying to I'msorryIhaven'taclue:
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By Hugo Fair
20th Jan 2022 12:44

BTW I believe I've misled you ... or rather I repeated your typo without noticing!

TD referred to wvm (not dvm - who has disappeared) - and I suspect wvm was shorthand for WhiteVanMan (whose profile appears to be alive but who hasn't posted for 6 months)?

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Replying to Hugo Fair:
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By Mr_awol
20th Jan 2022 10:15

Hugo Fair wrote:

BTW how do you know that Tallula (without a final h) has left the building?.

I hope not. I liked her. I found her to be reasonable in negotiations about my return to the boards following my 'accidental' permanent ban for nothing from JS.

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Replying to Mr_awol:
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By I'msorryIhaven'taclue
20th Jan 2022 11:11

She was very likeable, and has no doubt gone on to greater things.

Her Linkedin site says she left in December.

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Replying to Tax Dragon:
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By swampydrill
19th Jan 2022 21:06

.

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Replying to swampydrill:
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By Tax Dragon
20th Jan 2022 12:31

?

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Replying to Hugo Fair:
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By swampydrill
19th Jan 2022 21:11

Hugo, You obviously have nothing better to do than scroll through my old posts, I see in some of your other posts you talk about doubling clients fees, very professional to think you can double fees because someone has a bit of money although i would imagine your fees are pretty hefty because it takes you so long to answer a basic question and then you just look for a reason not to.
I would suggest if you would not like the general public to ask professionals (i guess some are playing accountant on here) a question about a financial subject then find a way for this site to be to yourselves. It was a very simple question i asked and its been answered by somebody who dealt with the question.
Thanks for your concern about my money but no its not the same amount as i bought some properties for cash.

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Replying to swampydrill:
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By Hugo Fair
20th Jan 2022 01:32

It's nice of you to be so concerned for me about how I run my business ... for what it's worth, although you're not a client (and I'm not charging), what you refer to as me having "nothing better to do" is one of the most basic initial steps in KYC.

Anyway, if you're happy you're happy (and all the more so for not being one of my clients) ... so we're both happy!

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Replying to Hugo Fair:
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By I'msorryIhaven'taclue
20th Jan 2022 09:51

Do you think Swampy should issue 3 x £50k dividends rather than 1 x £150k?

Rationale: eggs in baskets.

Or is he happy as he is!

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Replying to I'msorryIhaven'taclue:
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By Hugo Fair
20th Jan 2022 10:02

Touché ... or should that be a little touched?

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Replying to Hugo Fair:
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By I'msorryIhaven'taclue
20th Jan 2022 10:11

Tetchy, I'd say. You certainly touched a nerve.

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Replying to swampydrill:
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By Mr_awol
20th Jan 2022 10:24

Your suggestion to Hugo about the future of the site is irrelevant, because many (i nearly put most, but have no stats to back that up) of us would prefer this site to be for 'ourselves' and, in fact, it already is. If youd been paying attention you would have noticed various prompts on that during the signup process.

Some posters do answer questions from MOPs but despite the self-entitled attitude displayed by yourself and others like you, they do so voluntarily and against the advice of some who feel that feeding freeloaders just seeks to encourage more, or repeated, visits.

Often people come on, ask a question, don't bother to give any thanks and are never seen again until the next time they want free advice. If/when people don't get advice, they often spit their dummy (like you just have) and attack valued members of the community. They used to receive rather more robust responses than this, but sadly we had an interim editor in chief who decided to rewrite many of the 'rules' and try and make this place all open, welcoming, cuddly and fuzzy (for anyone who agreed with his 'vision' that is - dissenters were despatched quicker than you could say "Kim John Un").

In short, despite your advice to Hugo, i personally would rather have fifty hugos and none of you around here, and i suspect that will be a view that is commonly held.

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Replying to Mr_awol:
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By swampydrill
20th Jan 2022 13:05

Awol, i only thing i am self entitled to is a bit of respect, i asked a question and some people answered that, unfortunately decide to have a bit of fun at my expense, thats where my respect for them ends. I belong to other forum sites more relevant to what i do, if someone asks a question i dont say or imply pay my rate is $2500 daily fee before i answer, i just answer and help them.
Its not a matter of money and thats your issue as you probably feel thats what it is about. One thing i dont feel is singled out because there are a select few who quickly jump on someone they quickly realise is a non financial guy. As for 1 Hugo, youre welcome to him, youre well suited.

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Replying to swampydrill:
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By I'msorryIhaven'taclue
20th Jan 2022 13:45

swampydrill wrote:

I belong to other forum sites more relevant to what i do, if someone asks a question i dont say or imply pay my rate is $2500 daily fee before i answer, i just answer and help them.

I just googled swampydrill and you do indeed come up on many forums, from I can't get my Sky box to work to my Porsche is scratched; from divorce forums to landlord forums. Dozens upon dozens of requests for help and information - but not once in any of those threads do you yourself help anyone or offer any advice to others.

Just saying.

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Replying to swampydrill:
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By Tax Dragon
20th Jan 2022 13:54

I see you charge by the day but pay by the hour.

Accountants deserve a bit of respect too, you know. Some more than others in terms of tax knowledge, but so long as a person knows his/her/their limits and acts within those then they are doing a good job.

And some tax rules require looking up and thinking about. (I tried to give you a flavour above of the issues that may sometimes need to be considered - if only to eliminate them.) A one hour discussion with no time allowed for looking and thinking could land you with problems you had not anticipated (quite apart from the point(s) liono, SteveHa, ireally and others made above).

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Replying to Tax Dragon:
RLI
By lionofludesch
20th Jan 2022 13:56

Tax Dragon wrote:

I see you charge by the day but pay by the hour.

[chuckle]

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paddle steamer
By DJKL
19th Jan 2022 15:49

I think Phillip Green's wife has the £1.2bn record re a dividend, she was a resident of Monaco and owned all the "family" shares.

https://en.wikipedia.org/wiki/Tina_Green#:~:text=Green%20was%20the%20rec....

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Replying to DJKL:
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By Tax Dragon
19th Jan 2022 16:54

UK tax law has of course changed since then. In many, many ways.

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By legerman
19th Jan 2022 22:57

"i have queried my account if a larger dividend is allowed with no tax liabilty, he states there is no limit mentioned in HMRC advice"

There will be a tax liability on anything over 2k. This assumes you have no other UK income. I've assumed you aren't a UK resident for tax purposes.

First £2k 0% tax
next 35ishk 7.5% tax
remainder 32.5% tax

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By Michael Davies
20th Jan 2022 10:13

On a different tack.I had a warranty claim against a company which went into liquidation.The year before the director/shareholders voted themselves a one million pound dividend.I believe they did not accurately measure warranty claims (it was known at the time (within the industry )of voting the dividend ,that warranty claims would be catastrophic).The Auditors obviously accepted the warranty calculation without due diligence.We have recently seen big four firms being hammered for audit failures.Presumably there is so much of this going on amongst the bottom feeders that the Powers At Be simply do not have the resources to pick up on the audit failure or the directors malfeasance.
As a non auditor I have completely misunderstood audit reports.I was corrected last year when it was pointed out to me that the audit report was for the shareholders not third party review.

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