Confused about dividends and which profit to use

Londina

Probably for some this is an obvious question, but as I have never dealt with dividends for company director I'm quite confused...on which profit dividends can be paid? on current year or retained ones?

Example company at 30/06 made a profit of £160K, they have losses b/f of £120K, so retained earnings on balance sheet is £40K.

So which profits the director can choose? £160K or £40K? .....

Cheers

Londina

many thanks Mrne89 for confirming, I guessed it would be on retained ones but wasn't sure as director insists on taking dividends out of £160K and it's now causing a negative balance sheet!

stevo5678

Most of the £160k profit this year must surely be repaying his DLA that funded the huge loss last year?

Londina

stevo5678 said:

Most of the £160k profit this year must surely be repaying his DLA that funded the huge loss last year?

any repayment to DLA go against that account, not on dividend one