Articles

What Is Dividend Tax Voucher? & Dividend Taxation

by Vidit Agarwal Marketing Director

The Dividend Voucher- What Are They?

A dividend is a payment made by corporation to its shareholders. A limited company should have sufficient profits to distribute them as dividend. A dividend voucher is also known as dividend counterfoil, it is a written document that tells how much is paid, to whom it is paid and what shares the dividend receiver owns . A limited company must issue dividend vouchers to each shareholder receiving dividend. A company must have record of dividend voucher, in case HMRC ask for it. Dividend voucher can be produced by a company itself or it can ask an accountant to do the same. You can ask DNS Accountants to prepare dividend voucher for you. DNS also provide guidance for dividend related queries. A shareholder must keep dividend voucher as evidence and to complete their self-assessment tax return. Tax rules for dividend have been changed on 6th April 2016.

Details That Dividend Voucher Should Include:

  •          Limited Company’s name, registered address and number
  •          Shareholder’s name and address
  •          The date of issue
  •          Type of share dividend receiver owns( such as ordinary share)
  •          The amount of dividend paid to a shareholder
  •          How many shares are held by a shareholder
  •          Signature of a director or other company officers

Click Here, to see template of a dividend voucher

Working Out Tax On Dividend- 2016/17 Tax Year

Earlier dividend tax credit system existed but from April 2016, new taxation system was introduced for dividends in which initial £5,000 of dividend income was not taxable, a dividend tax-free allowance. You must know this doesn’t reduce tax liability on your entire income as dividend income is taxed after all other income sources are taxed. An individual can inform HMRC about their dividend income while filling self-assessment form. Tax you pay on income from dividend above threshold varies by tax band as mentioned below:

Add your dividend income with your other taxable income:

·        Basic-Rate Tax Payer (£0-£32,000), needs to pay 7.5% income tax on dividend.

·         Higher-Rate Tax Payer (£32001-£150,000), needs to pay 32.5% income   tax on dividend

·         Additional-Rate Tax Payer(above £150,000), needs to pay 7.5% income   tax on dividend

 

Please note you don’t pay tax on dividends from shares in an ISA. Dividend income that’s fall under your personal allowance do not count as dividend allowance.

Paying Yourself From A Limited Company

A company is a separate legal entity or artificial person in the eyes of the law. An individual can take money from the company as a director’s salary or through other benefits and expenses. Depending on how much salary you take you may become liable to pay income tax and National Insurance (NI) to HMRC.


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About Vidit Agarwal Committed   Marketing Director

363 connections, 14 recommendations, 1,640 honor points.
Joined APSense since, August 31st, 2017, From Harrow, United Kingdom.

Created on Feb 22nd 2019 07:43. Viewed 429 times.

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