Salary vs Dividends — Director Pay
Taking dividends legally — the rules and paperwork
Distributable profit, minutes, vouchers, records, reporting. The 5-step paperwork checklist.
Dividends are only legal if your company has enough retained profit (after corporation tax) to cover them. Five steps to do it properly: 1. **Confirm distributable profit** — post-CT retained profit must cover the dividend. 2. **Declare it** — hold + minute a directors meeting (even if you are the only director). 3. **Issue a dividend voucher** — date, company, shareholder, amount. 4. **Keep records** with company files. 5. **Report on Self Assessment** if above the £500 allowance. Unlawful dividends can be reclassified as salary (PAYE + NI) or a director's loan (S455 charge). **Read the full guide at [rraccountants.uk/taking-dividends-legally](https://rraccountants.uk/taking-dividends-legally).**
Resources
Bring your next MTD submission to SmartBooks.
Create a SmartBooks workspace now, or book a demo if you want to walk through the workflow with the team first.