Directors Dividends

Question: Is it possible to reduce my company corporation tax bill by paying the directors dividends?

If so, how do I show it in the accounts? Thanks

Answer: Anything that reduces profit will reduce corporation tax. It’s a long time since I did this (and only in theory) so it’s a bit hazy. I think it appears on the balance sheet somewhere.

I assume you’re a small, limited company. Consider paying the directors a bonus as this will definately reduce corporation tax.

There are loads of small, high street tax advisors now who should be able to advice you, which is also tax deductable .

Don’t forget, if you’re paying yourself you pay income tax as well, the income tax may be higher than the corporaton tax.

A lot depends on the amount and the profit in the company. if your profits are large, corporation tax should be less than income tax, if your profits are small it may be worth not trading as an Ltd company and taking it all as income between partners, the only thing you lose there is your limited liability.

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