Dividend Income - Where to enter dividend income from ownership of a company or an investment

Q - Where should I enter dividends received from ownership in a company. 

A - Dividends related to earnings are usually entered on the Employment screen. Be sure to set the income Type to Company Owner.

Alternatively, if you are modelling the business in the plan as an asset, modeled as an investment, the dividends can be set to pay out as part of the asset's Growth settings.  

Instructions follow on how to model dividend using either option. 

 

Option 1 - Enter dividends as earnings

Dividends earned from the ownership of the business are usually entered on the Employment screen.

 

Select TypeCompany Owner

This selection will expose the Net Annual Dividend field.

Enter in this field any dividends as an average annual amount net of the basic 10% tax (the corporate tax paid by the business), as this is how dividends are received.

Note: Any additional dividend taxes due to the individual being a higher rate tax payer will be calculated at the end of year tax assessment and shown as "Additional Dividend Tax" on the annual tax summary.

These tax details are found on the Let's See chart, click any bar of the during the time in which this income source is active. The chart legend will display. Click the Detailed Info link. On the chart details panel, select the Taxes tab.

 

Dividends can be scheduled to increase or decrease at future events, if necessary, on the Employment screen's Step Up / Step Down panel.

 

Option 2 - Set dividends to pay out as a percentage of an asset's valuation

If you are modelling your client's equity stake in a business, you may have the business entered into the plan as an investment (an unwrapped investment, to be precise).

Read more >> about options for modeling businesses in Voyant. 

 

 

If this business pays a dividend to your client, you could set the dividends to pay out as a percentage of the company's overall value. Thee dividends could paid out annually or reinvested into the business. 

The settings for dividends are found on the Investments screen under Advanced Settings > Growth

Use the Dividend field to set the amount of the annual dividend.

Tick Reinvest Yield if the dividend is to be reinvested into the business. Taxes will be assessed on these dividends annually, whether they are reinvested or not. 

 

Taxes on dividends and where to view them

If your client is a higher rate tax payer, any additional divided tax due will be worked out by the software and shown on the Let's See charts, Detailed Info panel, Taxes tab.

The summary on this tab (and in the printable Taxes (Detailed) report will show any applicable taxes as "Additional Dividend Tax".


 

Related topics

Business (Company) - How to enter a business as a property or an investment

Growth and Yield - Setting capital growth, dividends and interest on investments

Preferences - Reinvest Yield

Summer Budget 2015 - New Dividend Tax Rules

Switch the reinvestment of dividends and interest (yields) on or off in the future using Step Up / Step Down settings