Dividends

You can see the potential impact on your personal tax of the dividends you take each tax year here.

You can also see how we recommend you take dividends out of the company here.

To find out how much you have taken in dividends for a particular tax year, we recommend you run the accounts transaction report in Xero for the relevant dividend account code (usually account 930) for that tax year.

We also recommend you run this report for the company's year and then compare with the profit after tax you have available for dividends to ensure you don't take an illegal dividend.  

As Xero doesn't show you this automatically, we recommend you follow the guidance here to estimate how much you can take as dividends.

Director's loan account

As well as keeping an eye on the amount of dividends you are taking, you should also keep an eye on how much you owe the company or the company owes you.

To do this, we recommend you run the old accounts transaction report in Xero for the relevant director's loan account code (usually account 835).

If the balance shows as a debit, this means you owe the company money.  Unless this can be cleared either with a dividend at the year end, or by you repaying the company within 9 months of the year end, the company may have to pay S455 tax.  This normally occurs where you have taken money out of the company which should have been set aside for either VAT or, more usually, Corporation Tax.

If the balance shows as a credit, this means the company owes you money.  Usually you will then be able to repay this money to yourself as and when you need to.