Income Tax on Dividends

[LoobyLou2709]

I'll try to keep this brief!
Myself and husband are directors of our Ltd company, he is 51% shareholder and I'm 49%.
We take a small monthly salary and then dividends, and I put away a bit each month for our tax.
Last tax year we drew £84k in dividends between us (not each).
Our accountant did our tax return and the figure for dividends was £120k!! 😲
I panicked a bit as I hadn't put aside enough for the tax, so had to dip in to our savings,

How did he get this figure? Is it something to do with the shares? Do we pay tax even if we didn't draw them? We did have a very good year however decided to leave it in the business to re-invest.
I have obviously emailed our accountant but he's on holiday, and I stupidly left our returns to the last minute and then prioritised getting the money from savings and paying it on time, rather than contacting him first!
I'm pretty clueless when it comes to this so if anyone could explain it in a simple way I'd be so greatful!!

Are you taking a salary too? If your salary is above the personal allowance threshold, it will add to you tax bill

We both take a small salary which is below the personal allowance, I just don't know where he got the £120k for dividends from when we only drew £84k (this is all separate to the dividends), keeping fingers crossed he made a mistake, .. I just didn't know if it was anything to do with the shares which to be honest I don't really understand!

Sorry I meant separate to the salary

It sounds like your accountant made a mistake. It's hard to see how your dividends could have been higher than the amount you drew unless it was a timing thing (ie accruals v cash accounting?)

I assume that you filed your tax returns by 31st January to avoid the £100 fine and any interest due on your balancing payment? If so, then don't panic you have 12 months to correct it! Just file an amended tax return when your accountant is back from holiday.

Dividends can be declared but not drawn

Maybe additional dividends were declared to cover personal expenses from the company

Maybe it's because there is a different year end for your company to your personal tax year

Nobody will be able to give you an answer other than your accountant

Thank you for your replies, yes it was all filed and paid on time,
Ah I see, I will certainly check with him when he's back, so it sounds like it's not quite so simple as you just pay tax on what you draw then!

And yes our business year end is different, I didn't realise this affected personal income tax! .. I need to do a business tax course I think!! 🙈