How Often Can I Take Dividends from My Limited Company?

Dividends are one of the most tax-efficient ways for directors and shareholders of limited companies to take income. Unlike salaries—subject to PAYE and National Insurance—dividends are paid from post-tax profits, making them a popular option for business owners.

But when and how dividends are paid must be handled correctly to stay compliant with HMRC. In this guide, we’ll cover everything you need to know: how dividends work, legal requirements, how often you can take them, and how to use them in the most tax-efficient way.



Need tailored advice? SBX Accountants are here to help.

What Are Dividends?

Dividends are payments made to shareholders from a company’s retained profits—the leftover earnings after tax, expenses, and liabilities have been paid. They are not classed as business expenses and aren’t subject to PAYE, which is why many company directors prefer to pay themselves through a mix of salary and dividends.

How Are Dividends Paid?

To pay dividends legally, you must:

• Ensure the company has sufficient retained profits
• Record the payment in board meeting minutes
• Issue a dividend voucher stating:
• Shareholder names
• Amount paid
• Date of payment

These documents must be kept for accounting records and tax reporting. Shareholders must also report dividend income on their Self Assessment tax returns.

When Can’t You Pay Dividends?

Dividends must only be paid from retained profits. If the company lacks sufficient profits, any payments declared as dividends could be:

• Considered illegal
• Reclassified as salary, leading to additional taxes and penalties

Directors also have a legal duty to ensure the company can meet its ongoing financial obligations—like paying staff, suppliers, and tax bills—before making dividend payments.

Unsure whether your company can legally pay dividends? SBX Accountants can help assess your position and guide you through it.

How Much Can I Pay Myself?

You can only pay dividends from available retained profits. The actual amount you draw must also take into account the company’s cash flow to avoid putting working capital at risk.

If you're unsure how much profit is distributable or how much cash your business can spare, speak to a qualified accountant before declaring dividends.

How Often Can Dividends Be Paid?

There is no legal limit on how often dividends can be paid. You can pay them:

• Monthly
• Quarterly
• Biannually
• Annually

That said, most companies adopt a regular payment schedule (e.g., quarterly) to:

• Maintain clear records
• Reduce the risk of HMRC scrutiny
• Align with management accounts

Ad-hoc dividend payments are permitted but should only be made when the company’s financial position is carefully reviewed each time.

Dividend Tax Rates for 2025/26

Dividends are taxed differently from salaries and have their own rates:

Dividend Tax Rates for 2025/26:

• 0% on dividend income within your Personal Allowance (£0 to £12,570)
• 8.75% for the Basic Rate band (£12,571 to £50,270)
• 33.75% for the Higher Rate band (£50,271 to £125,140)
• 39.35% for the Additional Rate band (over £125,140)

⚠️ The dividend allowance has dropped to £500 for the 2024/25 and future tax years.

Timing and structuring your dividend payments correctly can significantly reduce your tax bill.

Balancing Salary and Dividends

Many directors combine a low salary with dividends to take advantage of tax allowances:

• Salary under NIC threshold: Avoid employee/employer NI
• Utilise personal allowance (£12,570): Pay no income tax on part of income
• Dividends taxed at lower rates: More take-home pay

This approach also preserves eligibility for benefits like the state pension.

How SBX Accountants Can Help

At SBX Accountants, we support limited company owners with strategic, compliant, and tax-efficient income planning. Our services include:

• 📄 Dividend Planning & Documentation: Prepare legal paperwork and dividend vouchers
• ✅ HMRC Compliance Checks: Ensure dividends are paid correctly and legally
• 📊 Tax-Efficient Strategies: Tailored advice to balance salary and dividends. Check out our Dividend/Salary tax calculator

Need help planning your dividend payments?
Get in touch with SBX Accountants today for expert guidance tailored to your business.