Returning share dividends?

[Leftie]

Can you give back share dividends?

I pay myself mainly in share dividends. I now realise that I have taken about £5000 too much in this tax year which will throw me into the 40% tax bracket = 40% on savings interest , company car, BiK etc.

Can I, and my co-shareholder, give the £5000 back to escape this? I will take it out again in April, but this time staying under the limit.

[Eric Mc]

Would the cash be put back into the company before the company's financial year end?

If it is, then I would see no problem in putting the cash back. Onviously, all the shareholders whould follow suit on a "pro-rata" basis UNLESS the shareholder who wants to rescind his dividend signs a formal "waiver" indicating clearly that he has decided to waive his right to this particular dividend.

[Leftie]

Eric Mc said:

Would the cash be put back into the company before the company's financial year end?

If it is, then I would see no problem in putting the cash back. Onviously, all the shareholders whould follow suit on a "pro-rata" basis UNLESS the shareholder who wants to rescind his dividend signs a formal "waiver" indicating clearly that he has decided to waive his right to this particular dividend.

Thanks Eric, I am the one with the problems because I have the company cars and the savings accounts are in my name.

I will put the money back just before year end.

[Eric Mc]

Make sure a waiver is printed off, signed and filed.

As you are no doubt aware, the taxing of dividends at the Higher Rate is actually calculated using a rate of 32.5% rather than the normal Higher Rate of 40%.

[dadofbud]

5k is the magic figure ( ceiling) forget the dividend paper work and call it directors loan

[Eric Mc]

That's only a BIK disclosure limit.

It still needs to be disclosed in the accounts under Company Law and the Revenue may still assess for additional Coorporation Tax under Section 419.

[Leftie]

Eric Mc said:

That's only a BIK disclosure limit.

It still needs to be disclosed in the accounts under Company Law and the Revenue may still assess for additional Coorporation Tax under Section 419.

Additional CT? OMG! The CT was paid on this money before dividends were paid, surely it is now just retained profit?

I intend to return it a few days before year end and then take it back again in April when the next lot of dividends are paid, remembering to stay below the threshold this time.