Dividend waivers

Produced by a Tolley Owner-Managed Businesses expert
Owner-Managed Businesses
Guidance

Dividend waivers

Produced by a Tolley Owner-Managed Businesses expert
Owner-Managed Businesses
Guidance
imgtext

In certain circumstances shareholders may wish to pay dividends other than in proportion to their shareholdings. This aim is typically achieved by one or more shareholders not taking a dividend when it is declared. To effect this, the relevant shareholders must waive their right to dividends from the company prior to the dividend being declared.

Care must be taken when waiving dividends. HMRC may attack this where there is a loss of tax as a result.

In order to minimise the risk of HMRC scrutiny when effecting a dividend waiver, the following measures should be taken:

  1. the waiver must be effected by a deed

  2. the deed must be executed before the dividend is declared or paid

  3. the waiver must be ‘commercial’

The first two points relate to ensuring that the dividend waiver is effective for the purpose intended. That is, if the waiver is not effected by deed or done retrospectively, the shareholder will still be entitled to the dividend when it is paid. The shareholder will likely have under-declared dividend income on their

Continue reading the full document
To gain access to additional expert tax guidance, workflow tools, generative tax AI, and tax research, register for a free trial of Tolley+™
Powered by Tolley+

Popular Articles

Group relief for carried-forward losses

Group relief for carried-forward lossesThis guidance note examines in detail the relief available to groups for carried-forward losses. The scope excludes the treatment of specialist businesses such as banks, insurance companies and oil and gas companies.From 1 April 2017, companies can surrender

14 Jul 2020 11:50 | Produced by Tolley Read more Read more

Spouse exemption from inheritance tax

Spouse exemption from inheritance taxArguably, the most important inheritance tax exemption is the spouse exemption from inheritance tax.There is no IHT to pay on gifts from husband to wife and vice versa, or from one civil partner to the other (referred to collectively in this note as ‘spouses’).

14 Jul 2020 13:56 | Produced by Tolley in association with Emma Haley at Boodle Hatfield LLP Read more Read more

What are connected companies for loan relationship purposes ― practical approach

What are connected companies for loan relationship purposes ― practical approachBrief overview of the rulesThe loan relationships legislation applies to any ‘money debt’ arising from the lending of money entered into by a company, either as a lender or borrower. The rules are contained in CTA 2009,

20 Apr 2021 16:00 | Produced by Tolley Read more Read more