What directors should clarify before taking a larger dividend

A strong year tempts many directors to increase dividends. Before you instruct the accountant, confirm retained cash after tax, upcoming capital spends, and any director’s loan balance that needs settling.

Consider personal income tax bands for the tax year, National Insurance on salary, and how a larger dividend affects student loan repayments or child benefit. If you rely on the company for family protection cover or pension contributions, shrinking reserves too far can leave those arrangements underfunded.

Share the planned extraction with your adviser and accountant in the same conversation. Aligning the personal cashflow plan with corporation tax timing avoids the familiar surprise of a larger personal tax bill arriving after the money has already been spent.