Home / Questions / Can I Pay Dividends If the Company Made a Loss?
Last updated 23 October 2026. Written by the Limited Company Accountant UK team, part of Accotax. Figures are for the 2026/27 tax year; always check GOV.UK for the latest rates.
Short answer: You can only pay dividends from distributable reserves, meaning accumulated realised profits. A loss in one year does not stop a dividend if retained profits from earlier years exceed it.
At a glance
| Rule | Dividends need sufficient distributable reserves |
|---|---|
| If breached | Dividend may be unlawful and repayable |
Check the numbers first
Look at retained earnings on your latest accounts, not just this year’s profit. Management accounts can also support interim dividends.
If you have paid too much
Unlawful dividends are normally reclassified as a director’s loan, which brings tax and repayment issues.
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The bottom line
You can only pay dividends from distributable reserves, meaning accumulated realised profits. If you would rather not do it alone, our fixed fees start at £45.83 + VAT a month.
Frequently asked questions
What are distributable reserves?
Accumulated realised profits minus accumulated losses.
Can I reclaim an illegal dividend?
Yes, the company can reclaim it.
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