Change to Dividend Tax Free Allowance
From 6th April 2018, whilst the structure of the dividend allowance remains in place, changes made in the Spring Budget 2017 mean that the dividend tax free allowance threshold has changed from £5,000 to £2,000 for the tax year 2018/19. In light of this change we have updated our popular Dividends Guidance Note.
We have also added to our Dividends group of templates by including documentation relating to Dividends in Specie. This includes some commentary in our guidance note as to what dividends in specie (otherwise known as “dividends in kind”) are, the board minutes necessary to recommend a dividend in specie and the shareholders’ ordinary resolution necessary to authorise it.
Whilst a specialist area, companies will not always pay dividends in cash and these new documents will be of help to SME businesses and their accounting advisers looking to satisfy the payment of a dividend by the transfer of specific assets such as property, an investment, equipment or machinery. Dividends in specie are particularly popular with companies considering intra-group transfers.
Our documentation specifically relates to the situation where a company declares a cash dividend to be satisfied by the transfer of non-cash assets of equivalent value. Note that as with the payment of a cash dividend, before a company can legally pay a dividend in specie it must have sufficient distributable profits. In broad terms this profit is the money a company has left over after paying all its business expenses and liabilities, including all taxes due.
These documents are suitable for private limited companies.
Our sub-folder on Dividends has been written with company secretaries or company directors in mind as well as other professionals such as accountants advising the boards of SME businesses.
The contents of this Newsletter are for reference purposes only and do not constitute legal advice. Independent legal advice should be sought in relation to any specific legal matter.