dividend receipt
A dividend voucher is essentially a dividend receipt. It records the details of the dividend payment and the declaration by directors agreeing to issue the dividend. It’s not just a formality – these vouchers are required by shareholders in order to complete their annual self-assessment (aka Personal Tax Return).
Are dividend vouchers a legal requirement?
In order to legally pay a dividend the company director(s) need to go through the following procedures: They need to determine whether the company has sufficient retained profits to cover the dividend at the date of payment. They must issue dividend vouchers to all shareholders.
How do you know when a dividend will be paid?
The standard practice for the payment of dividends is a check that is mailed to stockholders a few days after the ex-dividend date, which is the date on which the stock starts trading without the previously declared dividend. The alternative method of paying dividends is in the form of additional shares of stock.
Does a dividend voucher need to be signed?
This voucher should be kept in a safe place. By law, the limited company must keep a record of the dividend declaration via board meeting minutes, signed by an officer of the company (a chairman, or sole director). Here is a template of a standard board meeting minute template, which you are welcome to use.
Where can I get a dividend voucher template?
We have prepared a standard Board meeting minutes document and a Dividend voucher template for Limited Companies that have decided to distribute their retained profits in the form of dividends to its stakeholders. Our templates are free to download and use. You can download it in Word format as well as in the PDF format.
What happens if you do not have a dividend voucher?
Failure to produce dividend vouchers can result in penalties from HMRC, or at the worst a conviction of tax evasion. Dividends must be clearly declared as such; otherwise HMRC can deem payments made from the business account as salary. In this case income tax and National Insurance would be due.
Do you have to have minutes to pay dividends?
Questions on the practicalities of paying dividends are asked on a regular basis under the Any Answers area of AccountingWEB. In the top 10 of questions asked must be: “should minutes be prepared to support the payment of dividends” and “are dividend vouchers necessary for each payment made?” says Jennifer Adams.
How often do PLCs need to issue dividend vouchers?
PLCs often issue a composite annual voucher, so from this, presumably, it is the case that it is isn’t a legal requirement to produce a dividend voucher for every dividend payment, but one could produce one annually, or in theory every five or ten years! Remuneration? HMRC could argue the payments are remuneration.
