Dividend Payment

stuffedhippo

Not sure where to post this so please advise if in the wrong place.

I was told I was going to get a % dividend payment from my employer. This is coming out as a very low 4 figure amount.

It now looks at though he wants this payment to go through as a bonus on my salary. Am I right in thinking that if it does go through as a bonus I will have to pay Income Tax and NI on the amount (I am a basic tax payer).

However reading a page on HMRC ([hmrc website] /taxon/uk.htm) if it is paid as a dividend as originally said I would only have to pay 10%.

Are my findings correct, any help would be much appreciated.

Thanks

DVardysShadow

It can only be a dividend if it is a payment on shares you hold [and I suppose it has to be a payment at the same rate as is given to all other holders of the same class of share]. Otherwise it is more likely to be a bonus.

stuffedhippo

Thanks DVardysShadow. This is as I thought. When first mentioned it was definitely a % dividend offered so next step is to make sure it is that and not a bonus.

Thanks

holly_hobby

DVs spot on .. only shareholders are entitled to benefit from dividend payments - as in essence, it is a return on their investment (which has been converted to equivilent shareholding within the Co.).

Therefore in this instance, the discussed payment can only be an ad hoc bonus of some sort, which as forming part of your renumeration, will of course be liable to tax and NICs as per your regular salary.

(unless of course you are a shareholder, but I would guess you would be aware of this if it were the case !)

Hope this helps

Holly

DVardysShadow

stuffedhippo wrote: »

Thanks DVardysShadow. This is as I thought. When first mentioned it was definitely a % dividend offered so next step is to make sure it is that and not a bonus.

Thanks

You do have shares then?