Dividend Payment and Waiver Templates

Dividends are paid to shareholders from a company’s post-tax profits. When and how a company can pay dividends is governed by the Companies Act 2006 and the company’s articles of association.

This section contains a practical guidance note on dividends. It explains what a dividend is, the procedure for declaring and paying dividends, the paperwork involved and how a shareholder can waive their entitlement to a dividend.

There are also supporting templates, including board minutes for directors to recommend and declare dividends (depending on the company’s articles), shareholder resolutions to declare dividends, a dividend tax voucher which can be used as the formal record sent to shareholders, and a deed of dividend waiver for shareholders who wish to leave profits in the company (for example, an SME business owner who prefers to retain funds in the business rather than take them out as dividends). Templates are also included for approving dividends in specie (non-cash dividends).

When To Use These Templates

Use these templates when you are:

Declaring and paying a cash dividend to shareholders.
Recording board decisions to recommend and/or declare dividends under model or modified model articles.
Approving dividends by shareholder resolution, either at a general meeting or by written resolution.
Issuing dividend tax vouchers as a formal record of dividends paid.
Putting in place a deed of dividend waiver where a shareholder wishes to waive their entitlement.
Approving and recording a dividend in specie.

🔀 Document Toolkit: Typical Sequence (may vary)

Step 1 - Plan the dividend
Use the Guidance Notes – Dividends to understand the requirements under the Companies Act 2006 and your articles, and to decide the type and amount of dividend.

Step 2 - Board approval
Choose the appropriate Board Minutes to approve Dividend (short-form or long-form, model or modified articles) to record the directors’ decision to recommend and/or declare the dividend.

Step 3 - Shareholder approval (if required)

Use the Shareholders’ Ordinary Resolution – Declaration of Dividend and General Meeting Minutes – Declaration of Dividend for a meeting-based approval; or
Use the Written Resolution – Declaration of Dividend for a written resolution.

Step 4 - Waivers and in-specie dividends

Where a shareholder will not receive the dividend, put in place a Deed of Dividend Waiver.
For dividends in specie, use the Board Minutes – approval of a dividend in specie and, if needed, the Ordinary Resolution – Dividend in Specie.

Step 5 - Issue vouchers and keep records
Issue the Dividends Tax Voucher to shareholders and retain signed minutes, resolutions and waiver deeds with the company’s records.

Dividend Payment and Waiver Templates is part of Corporate. Just £38.50 + VAT provides unlimited downloads from Corporate for 1 year.

Frequently Asked Questions

When can our company legally pay a dividend? +

Only out of profits available for distribution: accumulated realised profits not already distributed or capitalised, less accumulated realised losses. A good current year does not by itself justify a dividend if past losses swallow it, and cash in the bank is not the test. Check the position against your last annual accounts or, if those do not justify it, prepare interim accounts. The guidance note here works through the assessment.

What is the difference between an interim and a final dividend? +

Who decides and when it binds. Directors typically decide interim dividends under the articles and can stop them before payment, because no debt arises until paid. A final dividend is usually recommended by the board and declared by the shareholders, and once declared it becomes a debt the company owes. Check your articles for the exact mechanics. This sub-folder includes board minutes and shareholder resolutions for both routes.

What paperwork do we need to pay a dividend properly? +

Board minutes recording the decision and the profits assessment, a shareholder resolution if it is a final dividend, and a dividend voucher for each shareholder showing the company, date, shareholder and amount. The voucher is the record shareholders use for their tax returns. Skipping the minutes is the classic error: without them a payment risks being recharacterised as a loan or unlawful distribution. All the templates are in this sub-folder.

We paid ourselves a dividend the company could not afford. What happens now? +

It is an unlawful distribution to the extent it exceeded distributable profits. A shareholder who knew or had reasonable grounds to believe that is liable to repay it, and directors who authorised it can be personally liable to the company. Do not ignore it: quantify the excess against the accounts, take advice and consider repayment or, where genuinely available, corrective accounting. In owner-managed companies HMRC may also treat sums as loans with tax consequences.

Can a shareholder give up a dividend so the money stays in the company? +

Yes, by a deed of dividend waiver executed before the entitlement arises, in practice before the dividend is declared or paid. A deed is required because the shareholder receives nothing in return. Waivers are common where an owner prefers to retain funds in the business. Use them carefully in family companies: HMRC can challenge arrangements that redirect income between connected shareholders. The deed of waiver template here handles the formalities.

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Dividends - Guidance and Approvals

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