Confused about dividends and which profit to use

LondinaLondina Experienced MentorPosts: 814MAAT, AAT Licensed Accountant
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

Comments

  • LondinaLondina Experienced Mentor Posts: 814MAAT, AAT Licensed Accountant
    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!
  • stevo5678stevo5678 Well-Known Cheltenham Posts: 326Registered
    Most of the £160k profit this year must surely be repaying his DLA that funded the huge loss last year?
  • LondinaLondina Experienced Mentor Posts: 814MAAT, AAT Licensed Accountant
    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

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