Dividends Explained: How They Work and How They’re Taxed

Dividend is a payment made to a shareholder(s) of a limited company as a return on their investment, made from distributable profits of the company. Dividend income is unearned income and is taxed differently from earned income, such as salary, which is subject to PAYE.

Dividends that are paid part way through the company financial year are known as interim dividends and one that is declared at the end of the financial year is known as a final dividend.

We prepare important documentation necessary to be done if a small or medium size company wants to declare dividend.