Company dividends

How a UK company makes a lawful dividend and why cash alone is not the test.

A dividend is a company distribution

Reviewed · Current · Law · From 6 April 2008

A distribution broadly transfers company assets to members in cash or otherwise, subject to the statutory exceptions.

A dividend is one kind of distribution. A salary, expense repayment, or genuinely repayable loan is not automatically a distribution merely because money leaves the company.

Exceptions and branches

• Section 829 excludes specified bonus shares, capital reductions, own-share transactions, and winding-up distributions.

Minutes and dividend vouchers

Reviewed · Current · Official guidance · Current reviewed treatment; earlier start date not yet established

GOV.UK says to record the directors' decision in meeting minutes and prepare a dividend voucher for each payment.

The voucher records the date, company, shareholders, and amount. The company keeps a copy and gives one to the recipient. A dividend is not a Corporation Tax business cost.

Exceptions and branches

• Share rights and the company's articles can change entitlement.

Worked example

Relevant accounts show £40,000 of accumulated, realised profits and £12,000 of accumulated, realised losses not previously used or written off. The statutory ceiling is £28,000. A £30,000 bank balance does not increase that ceiling: this is why cash does not establish distributable profits or commercial affordability.

Related concepts

• Distributable profits

• Dividend rates and allowance

• Director's loan accounts

Linked from

• Distributable profits

• Dividend rates and allowance

• Director's loan accounts

Sources

• Companies Act 2006, Part 23 — Section 829. Primary authority.

• Running a limited company: taking money out — Dividends; dividend paperwork; directors' loans. Official guidance.

How sources are ranked

Knowledge version: sterling-knowledge@2026-09-11.7. Last checked 11 September 2026.