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During 2016-17 and 2017-18 I wrote to my client to explain that he and his wife could each draw dividends of up to £5 000 from their limited company – they have no other sources of dividend. Further I mentioned that this limit would be reduced to £2 000 for 2018-19. I also like my clients to keep strict records of dividends paid and to make these during the tax year. The company accounting year end is 31 March and there are plenty of reserves to cover these payments.
My clients do not need the income but it seemed sensible to draw funds from the company while there was the opportunity to do this tax-free.
The husband has just contacted me to say that in the last week of March he and his wife each drew another dividend of £5 000 and have made a board meeting note and...
