Following the end of the 2022/23 tax year, you are required as director of your own limited company to produce dividend vouchers for all dividends that were declared in the tax year. We explain dividend vouchers and why they’re required by HMRC.
As a director, you can distribute retained profits in the business to company shareholders in the form of dividends.
The company director(s) must declare dividend payments – whether they are yearly or interim – by way of a dividend voucher. You can issue a dividend voucher each time your company pays out a dividend or following the end of the relevant tax year.
What is a dividend voucher?
Dividend vouchers validate the moment a company shares its hard-earned profits with its shareholders. They play an important role in documenting the distribution of company profits to shareholders and serve as official records, providing transparency and proof of income received. These vouchers are essential for maintaining accurate financial records and protecting shareholder rights.
What information should a dividend voucher include?
For each dividend payment the company makes, you must write up a dividend voucher showing the:
- Date
- Company name and number
- Names of the shareholders being paid a dividend
- Amount of the dividend
You must give a copy of the voucher to recipients of the dividend and keep a copy for your company’s records.
What else is required when declaring a dividend?
Please note, it is important that dividends are paid to all shareholders.
To pay a dividend, you must:
- Hold a directors’ meeting to ‘declare’ the dividend
- Keep minutes of the meeting, even if you’re the only director
For further information about dividend vouchers, please visit the government’s website.
Tax on dividends
Your company does not need to pay tax on dividend payments. But shareholders may be required to pay income tax they’re over £2,000. For more information about tax on dividends, please visit the government’s website.
What if I don’t produce dividend vouchers?
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.
You must ensure you are able to create dividend vouchers for all your interim dividends or appoint a contractor accountant to assist you.
Choose an accountant to help with your dividend vouchers
Accountancy software can help with producing dividend vouchers for your company, but it’s still down to you to ensure this is completed for each and every dividend you distribute.
A contractor accountant can help you by providing templates for dividend vouchers and even help you produce the vouchers and board minutes for dividends. This will save you hours of time, leaving you free to focus on work.
For more information about our limited company accountancy service and to discuss the services your business requires, please give our team a call on 0800 2294020 or schedule a consultation with our team of experts.
