Dividends Guide

What's Next:

  • We've emailed you a guide or download it here
  • Scroll through the guide here
  • Set up a free consultation with one of our accountants
  • Get an instant quote for accounting & virtual office services
Get an Instant Quote
No items found.

Dividends Guide

We've emailed you your guide.

Inside our Limited Company Expenses guide:

Select your customer type
Contractors

We started as contractor accounting specialists and built a service designed for contractors.

Self Employed / Sole Traders

For self employed individuals (sole traders) we reduce you admin and give you clear insights on your tax.

Small Business

We help you small business grow, take on your admin and make sure you’re running efficiently.

Book a Free Accounting Consultation
Book a free consultation with one of our accountants.

Read More Guides below:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

What are Directors Loans?

A director's loan is defined as money taken from your company that isn't either of the following:

  • A salary, dividend or expense treatment
  • Money that you've previously paid into or loaned the company

A Director's Loan Account (DLA) is a record of all transactions between the company and its directors. It records not just the money owed by the directors, but also the money owed to them.

Director's loans can be used:

  • when you need to access money in your company-apart from what you take out as a salary, dividend or expense treatment-for personal reasons.
  • for a variety of purposes, such as covering the costs of a home repair bill, travel plans or any unforeseen personal expenses that may arise.
Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

How do I pay an employee?

If you're paying an employee for the first time, you'll need to set up payroll. You need to take the following steps:

  1. Register as an employer with HM Revenue and Customs (HMRC) and get a login for PAYE Online.
  2. Choose payroll software to record employee's details, calculate pay and deductions, and report to HMRC.
  3. Collect and keep records.
  4. Tell HMRC about your employees.
  5. Record pay, make deductions and report to HMRC on or before the first payday.
  6. Pay HMRC the tax and National Insurance you owe.
Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

How do I pay myself as a contractor?

A contractor working through their own limited company can pay themselves through a couple of ways such as paying a salary and paying dividends. There are a few factors that need to be considered when deciding the best way to go about this.

For example, when operating inside IR35, contractors will be restricted to paying themselves a salary however when operating outside IR35 the doors are opened to maximise tax efficiencies.

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

Dividend Tax Calculator 20/21

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

How do I pay my student loan?

If you're self-employed, HMRC will work out your loan repayment amount from your tax return. You make your repayment the same time you pay your tax.

If you're an employee and your salary is above the minimum amount, your loan repayments will be deducted from your salary by your employer.

Additional repayments can be made through your online repayment account and by card, bank transfer or cheque.

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

PAYE, P60's and Paying Yourself Guide

  • What is PAYE
  • PAYE when self employed
  • When to register for PAYE
  • Sole trader taxes
  • Sole trader income tax calculations
  • Limited company dividends & salary
  • Dividend tax rates
Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

Contractors - should I be paying myself salary and dividends?

As a contractor, how you pay yourself will vary depending on whether your contract is subject to IR35.

  • Contract subject to IR35 (inside): Salary
  • Contract not subject to IR35 (outside): Salary, dividends + reimbursing any expenses you have paid for out of your own pocket

We've provided a more detailed explanation in our Forma Help Center resource.

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

How do I repay a Director's loan account?

There are various ways to repay a director's loan.

  • Dividend: A dividend can be declared, and the money can be used to pay off the loan instead of being transferred to the director's personal account.
  • Cash repayment: A repayment is made by transferring money into the company account.
  • Expenses or salary: The loan can be paid off using other money to the director, such as the director's salary or expense reimbursements.
Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

What is the optimal salary for a Company Director?

The optimum salary for a contractor to pay themselves in the current tax year is dependent on their overall income throughout the period.

In the instance there is no other income to be considered, it is generally recommended that salary is paid in line with the Secondary National Insurance threshold which is currently £732 per month (20/21).

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

What are Dividends?

NA

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

How do I change my salary?

NA

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

What are the taxes, rates and allowances on dividends?

A dividend is money that's paid out by limited liability companies to investors, usually on a quarterly or annual basis. These payouts are based on the quarterly profits of your company as well as the amount of stock you own.

Dividends are calculated based on profits-what is left in your company after all expenses have been paid-not revenue.

Dividends can be either paid in cash or reinvested into your investment portfolio via dividend reinvestment, or via SCRIP dividends-which allow companies listed on the LSE to give investors additional shares instead of cash payouts.

Dividend tax refers to the rates by which those dividends are taxed according to HMRC. Each year, these tax rates may differ.

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

Dividend Calculator (Excluding VAT)

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

How to calculate holiday pay for overtime and commission payments

"What are the rules around holiday pay?" is a common question often asked by employers.

It can be confusing, as regulatory changes mean that employers now need to consider additional elements when working out an employee's holiday pay.

Simply put, employers now need to include regular commission and regular overtime payments when calculating an employee's or worker's holiday pay.

This is explained in further detail below:

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

How do I pay myself when Self Employed?

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

How do I pay a Supplier?

There are various ways to pay your suppliers. Common payment methods include bank transfers, credit card payments and Letters of Credit.

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

How do I pay a Limited Company Pension?

If you're operating as a sole trader, you can contribute to a personal pension scheme.

If you're a limited company director, you can make pension contributions as an individual (as an employee), as well as through your company (as an employer). For the latter option, your pension contributions are paid directly from your business bank account.

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

How do I hire a new employee?

To hire a new employee, you need to:

If you're hiring staff for the first time, refer to HMRC's guide on the steps you need to take.

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

Dividend Calculator with VAT Flat Rate Scheme

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

How do I pay a Contractor?

You can pay an independent contractor by an hourly or daily rate, or by the project through the contractor's preferred payment method. You won't need to withhold taxes, as they are responsible for paying their own income and National Insurance contributions.

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.