Following the end of the 2018/19 tax year, you are required as director of your own limited company to produce dividend vouchers for all dividends that were declared in the tax year. We explain dividend vouchers and why they’re required by HMRC.
As a director, you can distribute retained profits in the business to company shareholders in the form of dividends.
The company director(s) must declare dividend payments – whether they are yearly or interim – by way of a dividend voucher. You can issue a dividend voucher each time your company pays out a dividend or following the end of the relevant tax year.
What is a dividend voucher?
A dividend voucher is essentially a dividend receipt. It records the details of the dividend payment and the declaration by directors agreeing to issue the dividend.
It’s not just a formality – these vouchers are required by shareholders in order to complete their annual self-assessment (aka Personal Tax Return). HMRC needs to be notified via the self-assessment if a shareholder has taken personal income in the form of dividends, as dividend tax may be due.
What information should a dividend voucher include?
A dividend voucher should include the following information:
- Name and address of shareholder receiving the dividend
- Name and registered office address of the limited company issuing the dividend
- Date of issue
- Amount of dividend paid
- Signature of the limited company director(s) or company officer
A dividend voucher will also include the number of shares owned by the shareholder at the time the dividend is declared, including the type of shares.
What else is required when declaring a dividend?
In addition to producing a dividend voucher, the company distributing dividends must create ‘board meeting minutes’. These show the dividend has been voted for and approved by the director. Without this, the dividend may be illegal.
Meeting minutes can be a written declaration approving the dividend and can be included alongside the dividend voucher itself.
Here is an example of a simple dividend voucher:
What if I don’t produce dividend vouchers?
Failure to produce dividend vouchers can result in penalties from HMRC, or at the worst a conviction of tax evasion. Dividends must be clearly declared as such; otherwise HMRC can deem payments made from the business account as salary. In this case income tax and National Insurance would be due.
You must ensure you are able to create dividend vouchers for all your interim dividends or appoint a contractor accountant to assist you.
Choose an accountant to help with your dividend vouchers
Accountancy software can help with producing dividend vouchers for your company, but it’s still down to you to ensure this is completed for each and every dividend you distribute.
A contractor accountant can help you by providing templates for dividend vouchers and even help you produce the vouchers and board minutes for dividends. This will save you hours of time, leaving you free to focus on work.
Our accountancy service includes assistance with the production of dividend vouchers – find out more about our limited company accountancy service now.