Dividends from Ltd Company

helentt

Hello, I cannot seem to find certain information online so hoping someone can help to point me in the right direction. I am in the support group on contribution (new style) ESA and I cannot find any documentation regarding LTD Company Director dividends and whether they would count as income. Can anybody help? I see people mention on previous threads about Shareholder Dividends but not Director Shareholder Dividends. Is there a difference? Many thanks!

calcotti

Dividends received are treated as capital.
I am not aware of any difference in treatment because the shareholder is also a director.
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/932332/admh5.pdfH5093 Where a claimant is treated as being in receipt of income yielded from capital then any actual income derived from that capital has to be treated as capital from the date it is due to be paid to the claimant. It cannot be treated as income.

H5094 The types of income which might be derived from capital include 
1. interest
2. dividends and
3. rental income.

Please see final comment for correct information. Strike through at request of original commenter.

lighthouse

interesting so a sole director and shareholder of a ltd company can pay themselves say £600 a month PAYE salary (to keep them below the £140 a week limit) and then pay themselves additional funds via dividends and still get ESA (contributions based). 

calcotti

You raise an interesting point to which I don’t know the answer but you have definitely raised doubt in my mind. If I could I'd edit my earlier reply to qualify the response!  

calcotti

See posts in other discussion 
https://forum.scope.org.uk/discussion/76903/does-the-weekly-earnings-limit-include-shareholder-dividends-would-a-tax-refund-affect-esa

(The advice I quoted in my first reply in this discussion is not the correct guidance - it is for UC.)