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The Dividend reconciliation is the account template you assign to each dividend nominal code. It records every dividend payment made in the period, works out the rate per share and the shareholder breakdown, apportions each payment into the correct UK tax year, and reconciles the total to the trial balance value of the account.

Table of contents 

When should I use this template?

Assign this template to each nominal code used for dividend payments. This article focuses specifically on using the account template itself.

Full background on how this fits together with the Statutory Information and Share capital reconciliation templates, and on the Dividend summary template that sits above it when a client has more than one dividend code, is covered in How do I use the Statutory Information, Share Capital reconciliation & Dividend Reconciliations? (UK market).

Before you start

  • The Statutory Information (Directors, Secretaries and Shareholders) template must already exist in the file. This template shows a warning and cannot be used until it does, because share types and shareholdings are read from there.
  • The share classes you will select against each dividend must already exist on the Share capital reconciliation.
  • If shareholdings changed during the period, enable share transaction details on the Statutory Information template first, so the number of shares held at each dividend date is calculated correctly rather than using a single figure for the whole year.

Background

This is a working paper for recording dividend payments and apportioning them correctly for tax purposes. There is no separate accounting standard driving its mechanics, but because dividends are taxed by reference to the UK tax year rather than the accounting period, the template splits payments across 6 April to 5 April tax years rather than by calendar or accounting year.

Steps

  1. If the client has waived dividends in the period, tick Include dividend waivers at the top of the template. This adds waiver columns to the shareholder breakdown further down.
  2. For each dividend payment, add a row and enter the Payment date (a warning appears if this falls before the start of the period) and select the Type of shares from the classes set up on the Share capital reconciliation.
  3. The Number of shares for that class and date is pulled through automatically from the Statutory Information template. Enter the Dividend amount paid and the template calculates the Rate per share for you. Attach supporting documentation to the row if needed.
  4. Add any additional documentation or explanation for the dividends as a whole underneath the main table.
  5. Review the breakdown table for each share type. It lists each shareholder, the dividend date, their number of shares (and, if waivers are switched on, whether the dividend was waived and the shares waived or remaining), and the dividend amount apportioned into the relevant tax year column, or into the Post 5th April column where a payment falls after the last tax year covered by the period.
  6. Check the reconciliation table at the bottom. It totals the dividends per tax year and compares the grand total to the account's trial balance value, showing a green dot when they agree or a red dot with the difference when they do not.

What flows through to the rest of the accounts/workflow?

Where a client has more than one dividend nominal code, the Dividend summary template (covered in the existing Statutory Information article) pulls the detail from every Dividend reconciliation account into one place. The payment, rate, shareholder and tax-year detail recorded here is also what feeds the Dividend Board Minutes and Dividend Vouchers documents.

What rolls forward next year?

Dividend payments themselves do not roll forward, as each period's payments are entered fresh on this template. What does carry through from year to year is the shareholder and share class data on the Statutory Information and Share capital reconciliation templates that this template depends on, so keeping those up to date each period is what keeps the shareholder breakdown here accurate.

Where the data comes from

Payment dates and amounts come from client dividend records (board minutes, bank payments); share types come from the Share capital reconciliation; and the number of shares held by each shareholder comes from the Statutory Information template, including any in-year share transactions recorded there.

Frequently asked questions

Why can't I use this template yet?

The Statutory Information (Directors, Secretaries and Shareholders) template needs to be added to the file first, as this template reads share types and shareholdings from there.

Why does the tax-year breakdown show more columns than the period covers?

The period may span more than one UK tax year (6 April to 5 April). The template shows one column per tax year the accounting period touches, plus a Post 5th April column if a payment falls after the last of those tax years.

Why hasn't a dividend from the prior financial year been included in the tax-year split?

The template only includes dividends paid in the current financial year. It does not pull in dividends from prior financial years, even when they fall within a UK tax year that overlaps with the current financial year. The tax-year columns therefore show the split of dividends recorded in the current financial year only, not the client's complete dividend total for the tax year across multiple financial years.

The number of shares looks wrong for a dividend part-way through the year

Check whether share transactions occurred for that shareholder in the period. If so, make sure share transaction details are enabled and recorded on the Statutory Information template, so the shareholding at the payment date is used rather than the year-end figure.

How does this relate to the Dividend summary covered in the other article?

This account template is what you assign to each dividend nominal code and is where payments are entered. The Dividend summary is a reconciliation-level template that only pulls accounts together when there is more than one dividend code, and it does not need any separate data entry beyond selecting the accounts.