Dividend vouchers provide shareholders of a limited company with information about their dividend payments when a company distributes its profits. We’ve created a short limited company contractors guide to dividend vouchers to provide a useful overview of dividend vouchers and what they are used for.
What are dividends?
When a company is doing well and accumulates profits, it can distribute the profits to its shareholders. The board of directors will decide the amount that will be disbursed as dividends, which will depend on the company’s financial health. Dividends are usually announced per share, so the amount you will receive depends on the number of shares you own.
What are dividend vouchers?
Dividend vouchers are issued when a company shares its profits with shareholders. They document the transfer of company profits to shareholders and are crucial for maintaining financial records, providing transparency and proof of income received.
What information should be included in a dividend voucher?
Before you issue a dividend payment or create a dividend voucher, you must:
- Hold a director’s meeting to declare the dividend
- Keep minutes of the meeting – even if you are the only director
For each dividend payment the company makes, a dividend voucher must be produced with the following information:
- Company name
- Company number
- Date
- Names of the shareholders being paid a dividend
- Amount of the dividend
A copy of the dividend voucher must be kept for your company’s records, and a copy of the voucher must be issued to all dividend recipients. Dividends must be paid to all shareholders.
For more information about dividend vouchers, please visit the government’s website.
Who prepares a dividend voucher?
The limited company is responsible for producing and issuing dividend vouchers. Accountancy software can help produce dividend vouchers for your company, but it’s still down to you to ensure this is completed for each dividend you distribute.
If you use a contractor accountant, they can assist with dividend payments and ensure that everything is accurate and compliant. A good contractor accountant can also provide templates for dividend vouchers and templates for board minutes for dividends.
If you are a Bluebird Accountancy client, you can find helpful information about creating and managing dividend vouchers on the FreeAgent website.
What happens if you don’t produce a dividend voucher?
Failure to produce dividend vouchers can result in serious penalties from HMRC, which, at worst, can result in a conviction of tax evasion. Whether the company is issuing a special dividend, regular dividend, or interim dividend, you must ensure you can create dividend vouchers or appoint a contractor accountant to assist you.
Tax and dividend vouchers
Your limited company does not need to pay tax on dividend payments. However, shareholders receiving dividend payments must pay income tax on dividend payments above the tax-free dividend allowance of £500 for the 2024/25 tax year. The rates of dividend tax are:
- Basic rate dividend tax (8.75%) – £501 – £37,000 of dividend income
- Higher rate dividend tax (33.75%) – £37,701 – £125,140 of dividend income
- Additional rate dividend tax (39.35%) – £125,141 + of dividend income
Dividends must be clearly declared; otherwise, HMRC can deem payments made from the business account to be salary. In this case, income tax and National Insurance would be due.
Appoint a contractor accountant to help with dividend vouchers
If you want support producing dividend vouchers, a contractor accountant can help you by providing templates which you can use to produce dividend vouchers. This will save you hours of time, leaving you free to focus on work.
Bluebird Accountancy has partnered with industry-leading cloud-based software provider FreeAgent to help contractors expertly manage their own bookkeeping and accountancy. You will be given access to your FreeAgent business portal to manage dividend payments and produce dividend vouchers.
For more information about our limited company accountancy service, please call our team on 0808 301 2389. You can also schedule a call, and a team member will be in touch to discuss your accountancy requirements and answer any questions you may have.