Paying and receiving dividends

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Paying and receiving dividends by Mind Map: Paying and receiving dividends

1. Tax treatment

1.1. Payer

1.1.1. Not deductible

1.2. Recipient is an individual

1.2.1. Income tax at dividend rates

1.2.2. £2k tax-free allowance

1.3. Recipient is a company

1.3.1. Small or large?

1.3.1.1. < 50 ees

1.3.1.2. T'over or BS <= £10m

1.3.1.3. Inc. 100% linked enterprises

1.3.1.4. Inc. % of partner enterprises

1.3.2. Small

1.3.2.1. Payer

1.3.2.1.1. UK R

1.3.2.1.2. Qualifying territory

1.3.2.2. Dividend

1.3.2.2.1. Not interest

1.3.2.2.2. Not deductible

1.3.2.3. Not tax avoidance

1.3.3. Not small

1.3.3.1. Dividend

1.3.3.1.1. Exempt category

1.3.3.1.2. Not interest

1.3.3.1.3. Not deductible

1.3.3.2. Not tax avoidance

2. Dividend compared to bonus

2.1. Lower rate of tax overall

2.1.1. No NICs on dividends

2.2. Company law requirements

2.2.1. Distributable profits

2.2.2. Correct documentation

2.3. Not earnings

2.3.1. Pension contributions

2.3.2. State benefits

2.3.3. National Minimum Wage

3. Types

3.1. Interim

3.1.1. Can be varied

3.2. Final

3.2.1. Approved by shareholders

3.3. In Specie

3.3.1. Transfer of an asset

3.3.1.1. SDLT

3.3.1.2. VAT

3.3.1.3. Gain for company

3.4. Capital

3.4.1. Reduction of share capital

3.4.2. Buy-back

3.4.3. Winding-up

4. Advising the OMB client