Home / Guides / How to Pay Dividends Correctly
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: To pay a dividend legally your company must have enough retained profit, the directors must declare it, and you must record it with a board minute and dividend voucher. Dividends are paid per share, not per person.
At a glance
| Source | Retained profits after Corporation Tax |
|---|---|
| Paperwork | Board minutes and dividend vouchers |
| Allocation | In proportion to shares held |
| Tax | Paid via Self Assessment |
The legal steps
- Check the latest accounts show enough distributable reserves.
- Hold a board meeting and minute the declaration.
- Issue a dividend voucher with date, amount and shareholder.
- Record it in your bookkeeping.
Interim vs final dividends
Interim dividends are declared during the year; final dividends are approved after the accounts. Both need distributable profits.
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What if there are no profits?
A dividend paid without enough profits is unlawful, can be reclaimed, and is usually treated as a director’s loan.
The bottom line
To pay a dividend legally your company must have enough retained profit, the directors must declare it, and you must record it with a board minute and dividend voucher. If you would rather not do it alone, our fixed fees start at £45.83 + VAT a month.
Frequently asked questions
Can I pay dividends monthly?
Yes, if there are sufficient retained profits each time and each is recorded.
Do dividends need a board meeting?
Yes, the directors should declare them and keep minutes.
Can I pay dividends to my spouse?
Only if they hold shares. Other arrangements can be challenged under the settlements rules.
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Our packages start at £45.83 + VAT and cover accounts, tax and deadlines. Get a free quote or call 0203 4411 258.
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