Sarah Bradford explains how to keep dividends lawful and highlights pitfalls to avoid.
A dividend is a distribution of a company’s retained profits to its shareholders. Paying dividends can be a tax-efficient way to extract profits from a company, as dividends are taxed at dividend tax rates, which are lower than the standard income tax rates, and there is no National Insurance contributions (NICs) liability to worry about. However, the profits from which dividends are paid have already suffered corporation tax.
Companies thinking of paying dividends need to ensure that they comply with the associated company law requirements, which can be complex. Here, we take a look at some
