DNS-Accountants

What are Dividend Vouchers?

For a limited company, profit distribution can be done by means of dividends. Once a company has identified that it has adequate profits to share out as dividends, it must compute the amount of dividend to be paid and minute the discussion to declare dividends. Since the introduction of the new dividend tax, it has become imperative to prepare dividend vouchers or remarks (notes) of a meeting where dividend payment has been agreed. Also, each shareholder must be issued a dividend voucher. A dividend voucher, sometimes referred to as a dividend counterfoil, is a written record depicting how much dividend was paid and to whom. A company can either issue a dividend voucher itself or ask an accountant like dns accountants to do it on its behalf.

It is imperative for both, the company and shareholders, to maintain a record of the dividend voucher. Shareholders must keep the dividend voucher as an evidence for tax purpose and also use it to file their self-assessment tax return. Essentially, a dividend voucher is a simple way to keep records of who received it, when it was received, and how much dividend was received.

What Are Dividend Voucher

The dividend voucher should include: -

  • Name and address of shareholder
  • Limited company name
  • Date of issue
  • Amount of dividend paid
  • Signature: Company Director

Dividend Voucher template example

Dividend Voucher

  • Limited Company Name
  • Limited Company Registered Address

The board of directors of [THE COMPANY] met at [BUSINESS ADDRESS] on [DATE] and declared an interim dividend of £X.X per Ordinary Share in respect of the financial year ended [YEAR END DATE] payable to shareholders registered at the close of business on [DATE].

  • Shareholder Name
  • Shareholder Address


  • No. of ORDINARY SHARES:
  • Dividend Payment: XXX
  • Signed By:
  • Company Director or Company Secretary (if applicable)

Taking Money from a Limited Company

Directors of a limited company can take money from the company by means of Salary, benefits, and expenses. To receive the stated remuneration, the company must be registered with HM Revenue and Customs (HMRC) as an employer. A company must deduct Income Tax and National Insurance contributions (NIC) from a director’s salary and pay these to HMRC. Also, tax is liable on business belongings that may be used for personal need.

Dividends

Dividends cannot be treated as business costs while computing the Corporation Tax. A company should not pay-out more in dividends than the profit available from the current and prior financial year. Ideally, dividends must be paid to all shareholders. For every dividend payment a company makes, a dividend voucher must be written specifying all the essential details listed in a dividend voucher. A copy of the voucher must be shared with the shareholder and also be kept in company records. The company does not have to pay tax on dividend payments. Rather, shareholders must pay Income Tax if it’s over £500.

There are no rules which determine how often a company should distribute dividends. However, we at dns accountants suggest that processing dividend payments annually will help the company to analyse its profits and take the right call. The most essential thing to remember is that all dividend payments must be legal (i.e. there is satisfactory retained earnings in the company to cover the dividends), or else they will be classed as illegal and could result in HMRC penalties.

In contrast to traditional employees, limited company owners can determine the timing of dividend payments, as well as the amounts to be paid as dividends. This is helpful in tax planning. For example, if a person is working hard during a current tax year, with a view to taking a ‘career break’ the coming year, he / she would be sensible to delay distributing some of the profits until the year in which earning will be less. Doing so, an individual will pay less high rate tax by splitting the distribution over two different tax years.

An individual may also take advantage by splitting ownership of the company with a spouse, particularly, if there is no additional source of income. As a couple, there are provisions like non-working partner’s tax allowance, and hence, individuals can pay less rate tax.

Tax credit

Tax credits do not apply post the 2016/17 tax year. From 6th April 2016, instead of net and gross dividends, and the tax credit, only the total dividend to be paid should be included in the dividend vouchers.

Dividend tax thresholds for tax year 2024/25

As per the new dividend taxation system, fixed tax rates apply for 2024/25 tax year onwards. Through a self-assessment form HMRC must be informed about the income received as dividends. For 2024/25 tax year onwards, dividend income is taxed as follows:

Tax Band Tax rate
Basic 8.75%
Higher 33.75%
Additional 39.35%

A dividend allowance of £500 is also provided, which means that the initial £500 of dividends is not taxable. However, this allowance does not decrease the total income upon which tax needs to be paid. Dividends are taxed after all other income sources have been taxed, e.g. salary and other pertinent earnings (investments or savings). Consequently, dividends will fall into one of the tax bands stated above, after other income sources and personal allowance have been added together.

How can dns accountants help?

dns Accountants in London is one of the leading accounting service providers in the United Kingdom. A trusted brand, has years of knowledge in the accounting and taxation domain. The firm has been helping individuals with Dividend Voucher guidance and other dividend related tax queries for many years. The team includes learned taxation professionals and ACA’s or Chartered Accountants (CAs). With its primary focus on customer service, the firm believes in delivering unmatched client service. dns accountants offers:

  • Services at a nominal rate
  • Best-in-class accounting and tax-planning services
  • Prepare dividend voucher and provide guidance

Other services

Reliable services are imperative to businesses and this is the predominant reason why so many businesses rely on dns Accountants in Wigan. The firm provides accounting and taxation services to owner-managed businesses and self-employed individuals, including freelancers and contractors. Our expert team of Chartered Accountants (CAs) and ACAs provide services ranging from accounting to payroll management to tax preparation and filing.

Speak with an expert

Any questions? Schedule a call with one of our experts.

About the author
Blog Author

Sumit Agarwal
Sumit Agarwal (ACMA ACA India), the Managing partner of dns accountants is a highly respected accountant with expertise in helping owner-managed businesses.

  • Book a free consultation
Receive accounting news and updates in your inbox

About the author
Blog Author

Sumit Agarwal
Sumit Agarwal (ACMA ACA India), the Managing partner of dns accountants is a highly respected accountant with expertise in helping owner-managed businesses.

DNS-Accountants

See how dns can help
you today.

Save tax
Save tax

Our experts will work with you to reduce your corporation, personal or any other tax liability, all within the rules of the UK tax legislations. We’ll ensure you’re claiming all allowances and expense claims that you would be elegible for.

Reduce your admin
Reduce your admin

We give free software to all of our clients. You’ll be able to raise sales invoices, snap pictures of receipts and be MTD compliant with ease. You can even manage your business anywhere there’s an internet connection, thanks to our mobile app!

Grow your business
Grow your business

Successful business owners are those that are on top of their numbers. Businesses are driven by the numbers behind them. If you’re not reviewing your profit & loss or balance sheet regularly, how would you know how your business has performed and how would you make proper business decisions? We can help you make sense of your numbers.

Free Business Software!

Limited time only!

Free Business Software

Say Goodbye to Bookkeeping Hassles: Nomi offers Free Receipt Processing and big savings!

  • Built in payment solutions.
  • Track profitability, debtors and creditors
  • Snap pics of receipts with the mobile app
  • Free Receipt Processing
  • Hasslefree Bookkeeping
  • Cost Reduction
Get Started
Close nomi