When calculating the amount to be paid in dividends, should losses from previous years be taken into account? My limited company made a profit of £10,000 in 2021. The same company made a loss of £5,000 in 2022. How much dividend can the directors pay in 2023 – £5,000 or £10,000? 

Arthur Weller replies:  

If you look at HMRC’s Company Taxation manual, you can see that dividends can only be paid out of “profits available for distribution”, calculated by reference to the ‘relevant accounts’ – the company's latest annual accounts. I can't answer your question properly because I haven't seen the relevant accounts, but assuming that the company's first year was 2021, the directors can only now pay a dividend of £5,000.