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

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.

Click on the + button and navigate to the Income Tile


Select SourceCompany Owner

This selection will expose the 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 "Dividend Yield" on the annual tax summary.

These tax details are found on the Year View>Taxes, click any bar during the time in which this income source is active. 

Dividends can be scheduled to increase or decrease at future events, if necessary, on the Employment screen's menu Steps 

Click Add Step

You can either increase or decrease the Dividend payment from this screen. Click on Timing and select when you would like these changes to occur.



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).

How to enter a business as a property/asset or an investment 



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.

Looking at the Growth section of the Investment you can see a section for Dividend and Interest yield. Your first option is to reinvest this yield back into the account as shown below;

If you select 'No' on the Reinvest Yield option

In the case of a dividend, you will then see a dividend paid out in the plan each year.