Dividends Paid — Where They Appear in Your Accounts

If your company paid dividends during the year, you may be wondering where to enter them in TinyTax. This guide explains how dividends paid affect your accounts and where they show up.

Dividends Are Not an Expense

Dividends paid to shareholders are not a business expense. They are an appropriation of profit — a distribution of money the company has already earned. This means:

Dividends do not appear on the profit and loss account
Dividends do not reduce your taxable profit
There is no "dividends paid" field in the P&L section of the form

This applies to both micro-entity (FRS 105) and small company (FRS 102 Section 1A) accounts.

How Dividends Affect Your Balance Sheet

Dividends reduce your company's retained earnings — the accumulated profits kept in the business. When you enter your balance sheet figures in TinyTax, the Retained Earnings line is calculated automatically from your other entries.

Here's how it works:

Your company makes a profit (shown on the P&L)
That profit increases your net assets on the balance sheet
Dividends paid during the year reduce cash (an asset), which reduces net assets
TinyTax calculates Retained Earnings as: Net Assets minus Share Capital

So when you enter your closing balance sheet figures, simply enter them as they stand at your year end — after any dividends have been paid out. The retained earnings figure will automatically reflect the reduced cash balance.

ℹ You do not need to enter dividends separately. Just enter your actual closing balance sheet figures (assets, liabilities, equity) as at your year end. If dividends were paid, your cash balance will already be lower, and retained earnings will reflect this automatically.

Example

A company has:

Profit for the year: £20,000
Dividends paid during the year: £5,000
Opening retained earnings: £10,000

At the year end:

The cash balance is £5,000 lower than it would have been without dividends
Closing retained earnings = £10,000 + £20,000 − £5,000 = £25,000

When entering figures in TinyTax, you enter your actual closing balances. The £5,000 dividend is already reflected in your lower cash figure. TinyTax calculates retained earnings from your net assets and share capital — no separate dividend entry is needed.

Dividends Received vs Dividends Paid

Don't confuse dividends paid (to your shareholders) with dividends received (from investments in other companies):

Type	Where in TinyTax	Tax treatment
Dividends paid	Not entered — reflected in closing balance sheet figures	Not a deductible expense
Dividends received	Box 620 (Dividend income) in the P&L section	Exempt from corporation tax, but included in augmented profits for marginal relief

⚠ Dividends received (Box 620) only appears for holding/investment companies. If your company received dividends from another company, contact support to check whether this applies to your filing.

Common Questions

Q: Do I need to tell HMRC about dividends paid? A: Dividends paid are not reported on the CT600 corporation tax return. However, shareholders who receive dividends must report them on their personal Self Assessment tax return.

Q: Can I deduct dividends from my taxable profit? A: No. Dividends are paid out of after-tax profits. They do not reduce your corporation tax bill.

Q: My accountant's trial balance has a "dividends" line — where does it go? A: If you're importing a trial balance, dividends paid should be included in the equity section, where they reduce retained earnings. If your trial balance shows dividends as a separate line, subtract them from your retained earnings / profit and loss reserve figure before entering it.

Q: What about interim dividends? A: Interim dividends (paid during the year, before final accounts are prepared) are treated the same way. They reduce your closing cash balance and therefore your retained earnings. Enter your actual closing figures and the calculation handles itself.

Last updated: March 2026

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