Why the dividends in your company accounts might not be the right figure for your Self Assessment tax return.

I was working on a director's Self Assessment tax return recently and needed to establish how much dividend income they'd received during the tax year. The company's accounts included a figure for dividends, so at first glance it looked as though the information was already there. Unfortunately, it wasn't quite that straightforward.

Company accounts and personal tax years don't always match

The problem is that a company's financial year and an individual's tax year aren't necessarily the same thing. A limited company might prepare its accounts to 31 December, 30 June or just about any other year-end date. An individual's tax year, meanwhile, always runs from 6 April to the following 5 April. That means the dividends shown in a company's accounts won't necessarily be the dividends that need to go on the director's personal tax return.

For example, imagine a company with a 31 December year-end. Its accounts show £20,000 of dividends for the year ended 31 December 2025. It's tempting to take that figure and include it in the director's 2025/26 tax return. But what if £8,000 of those dividends were paid in February 2025, before the personal tax year had started? They wouldn't normally belong in the 2025/26 return. Equally, there could have been dividends paid in February 2026 that appeared in the following year's company accounts but still fall within the 2025/26 personal tax year.

The company accounts could be entirely correct. The £20,000 could be entirely correct. It just wouldn't necessarily be the right figure for the tax return, which is why I need to know more than the total.

Why dividend dates and records matter

When I'm preparing a director's Self Assessment return, I want to establish which dividends were actually declared and when the shareholder became entitled to them. That usually means looking at dividend vouchers, the relevant company records and, where appropriate, the accounting entries. The dates matter, and so does the distinction between interim and final dividends. Simply looking at when money left the company's bank account doesn't always tell the full story.

There's another complication that can make this less obvious than it sounds. Directors of small companies often take money out of the business throughout the year, sometimes in fairly regular amounts, with the transactions recorded through their director's loan account. Some of those withdrawals may subsequently be covered by dividends, but taking money out of a company doesn't automatically make it a dividend. There needs to be an actual dividend, supported by the appropriate records and sufficient distributable profits.

Taking money out of the company isn't automatically a dividend

This is where I sometimes see another problem. A director transfers money from the company to their personal account and labels the bank transaction “Dividends”, perhaps because that's what they've always called money taken out of the business. That description alone doesn't necessarily make it a dividend, but it can create confusion about what was intended and when. If a dividend really was declared, we can't simply move it to another tax year later because that would be more convenient.

On the other hand, if the transfer was actually a withdrawal through the director's loan account, there may still be options when reviewing the company's position and planning dividends properly. The important thing is to establish what actually happened, rather than treating the wording on a bank transaction as the final answer. Good tax planning involves making decisions at the right time, not rewriting history afterwards.

I can understand why these distinctions get overlooked. From the director's perspective, the money has come out of their company and into their personal bank account. Whether the company year ends in December or June probably isn't something they're thinking about when making the transfer. But the distinction can affect how much dividend income is reported in a particular tax year, the tax payable and, potentially, whether information in a previously prepared return needs revisiting.

Getting the right figure for your tax return

It also highlights something I come across quite regularly in accounting work: a figure can be accurate without being the right figure for the question we're trying to answer. The company's annual accounts are prepared for one purpose and cover one period. The director's personal tax return serves a different purpose and covers a different period. We can't always take a number from one and transfer it directly into the other.

None of this means directors need to become experts in dividend taxation. It does mean that keeping proper records of dividend declarations, amounts and dates makes life considerably easier when the tax return comes around. And it can avoid the rather frustrating situation where the accounts have been completed, everything appears to be in order, but we still have to go back and ask when the dividends were actually declared.

Sometimes the missing information isn't another calculation. It's simply a date.