If you run a limited company, you can distribute any profits you make via dividends to your shareholders. But how do you keep a record of your dividend distributions?
Once you have made sure that you have sufficient retained earnings in your company to distribute to its shareholders, you must record your decision to declare dividends via company minutes, and issue each company shareholder with a dividend voucher.
This voucher acts as a “receipt” and should be kept as evidence for tax purposes, when calculating your self assessment liability at the end of the tax year.
For more background to dividends themselves, make sure you read our key guide – how are dividends taxed?
We also recommend this 2020/21 dividend tax calculator, which will work out your tax hit, according to your own salary and dividend mix.
Dividend Vouchers – Required Information
The Government introduced significant changes to the way dividends are taxed in April 2016, which vastly simplified the way dividends are accounted for. Unfortunately, for company owners, the overall dividend tax burden increased significantly.
You need to include the following details on dividend vouchers, for every shareholder.
- The date.
- The company name, and registered number.
- The type of security – usually ‘Ordinary Shares’.
- The shareholder’s name and address.
- The number of shares held by the recipient.
- The amount of the dividend payment.
- Signature (real, or electronic) of a Company official.
We have also provided an example dividend voucher below. We recommend you check with your accountant if you have any questions about declaring declarations.
Ltd Company Name & Registered Address
The board of directors of YOUR COMPANY LIMITED met at [ADDRESS] on [DATE] and declared an interim dividend of £X per Ordinary Share in respect to the financial year ended [YEAR END DATE] payable to shareholders registered at the close of business on [DATE].
Shareholder Name & Address
No. of Shares (and type of Share – usually “ORDINARY SHARES”)
Company Official (e.g. Director / Company Secretary).
Board Meeting Minutes
Limited companies are legally obliged to keep records of all dividends made, via board meeting minutes.
An example statement from board meeting minutes would be:
“It was resolved that an interim dividend of £X per Ordinary Share in respect of the year ended [YEAR END DATE] be declared on the Ordinary shares and payable on [DATE] to Ordinary shareholders registered at the close of business on [DATE].”
Most small businesses use online accounting software these days, such as the excellent FreeAgent, which we’ve used at Bytestart since 2010.
The software automatically creates dividend vouchers and board minutes for you, when you update your account with a new dividend distribution. It really couldn’t be simpler.