Why Dividend Timing Matters
For Ltd company directors using lenders that assess "salary + dividends," the dividends that count are those declared in the accounting period your application is based on. This means strategic timing of dividend declarations can affect your borrowing capacity.
The key principle
Dividend Declaration vs Payment
What matters is when the dividend is declared (the board resolution date), not when it's paid. You can declare a dividend in March (end of your accounting period) and pay it in April — it still counts in the March year.
Key Dates to Understand
Your Accounting Year End
The date your company accounts are prepared to (e.g., 31 March, 31 December). Dividends must be declared before this date to appear in that year's accounts.
Personal Tax Year End (5 April)
For personal tax purposes (and SA302s), the tax year runs 6 April to 5 April. Dividends received in a tax year appear on that year's SA302.
Accounts Preparation Time
Your accounts need to be prepared and certified before you can use them. Allow 1-3 months after year-end for this process.
Timing Strategies
Strategy 1: Boost a Specific Year
If your current year's dividends are looking low, declare additional dividends before your accounting year-end.
Scenario: Year-end is 31 March 2026
Current dividends declared: £30,000
Target for mortgage: £50,000
Action: Declare additional £20,000 dividend before 31 March 2026
Note: This assumes you have distributable reserves and accept the tax implications.
Strategy 2: Wait for Better Figures
If your next accounting year will show higher dividends, wait until those accounts are prepared before applying.
Scenario: Current year dividends: £40,000
Next year (almost complete) dividends: £60,000
Action: Wait until new accounts are ready (adds 4-6 months to timeline)
Strategy 3: Use Net Profit Lenders
Best option: If you're tax-efficient, find lenders that don't focus on dividends at all.
Scenario: Low dividends but high company profit
Salary + dividends: £52,570
Share of net profit: £100,000
Action: Use Nationwide, Halifax, Accord, etc. — dividend timing irrelevant
The best strategy
Worked Examples
Example 1: Steady Dividend Pattern
Sarah takes consistent dividends throughout the year.
Year 1
£42,000
Year 2
£45,000
Year 3
£48,000
Outcome: Lenders see consistent, growing dividends. No timing concerns. Average: £45,000 + salary.
Example 2: Strategic Year-End Declaration
James realizes in February that his year (ending 31 March) has low dividends.
Dividends declared to date: £25,000
Company has £40,000 available reserves
Decision: Declare additional £20,000 in March
Outcome: Year shows £45,000 dividends instead of £25,000. Extra tax cost ~£3,000-4,000, but borrowing increased by ~£90,000.
Example 3: Waiting for Better Figures
Chen's previous year was weak but current year is strong.
Last year
£35,000
Current year
£55,000
Decision: Wait 3 months for current year accounts to be prepared. Borrowing increases by ~£90,000. Worth the wait if no urgent purchase timeline.
Model your dividend options
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