Accounts, Tax and VAT infoblog! -

Sage tips and advice

August 25, 2009

Sage nominal code for Dividends

When a Limited company pays dividends to its shareholders, it is best to post (allocate) these entries to a separate nominal code on Sage.  Code 3102 ‘Dividends Paid’ is the best place for these dividends.

As these payments are NOT an allowable business expense but rather a share of the after tax profits, they should NOT be shown as a expense on the Profit and Loss account.

Ensure that when the dividend is entered into Sage, the VAT code must be ‘T9′ as dividends are outside the scope of VAT and should not be shown on the VAT return.

Any money introduced by a director, or paid out to a director must also be given the VAT code ‘T9′ so as to exclude it from the VAT return.

  1. Thanks very much. that was exactly what I wanted to know.

    Comment by Carol Hudson — November 2, 2009 @ 3:22 pm
  2. Excellent tip! I’ll be coming back to your site. Thanks for your efforts.

    Comment by Mike — November 4, 2010 @ 11:07 pm
  3. What is the best way to create a dividend payment on sage so that it deducts from the bank balance I.e Journal, PO etc

    Comment by Gemma — December 7, 2010 @ 5:09 pm
  4. Hi Gemma

    The easiest way to enter a dividend payment would be to go to ‘Bank’ then ‘Payments’. You enter the dividend as a normal bank payment, but with a ‘T9′ code, as you do not want it appearing on the VAT return. You should already have a dividend code set up in Sage, so post the entry to that code.

    Kind regards

    Dave

    Comment by admin — December 9, 2010 @ 1:36 pm
  5. This is useful. However, by posting it to 3102, what does your P&L show? Will it show the 3102 Value as a crdit prior to Tax calculations?

    Comment by Vladimir — January 29, 2011 @ 12:13 am
  6. Hi Vladimir

    A dividend payment is a payment of after tax profits……paying out to the shareholders the profits available. It is not a P & L expenses and so Sage does not show the dividend in the P & L account. So say the company made a profit of £100,000 and paid £21,000 of corporation tax…..the maximum dividend that could be paid would be £79,000.

    This would be shown in the profit and loss account on the balance sheet.

    Kind regards

    Dave

    Comment by admin — February 11, 2011 @ 3:28 pm

Sorry, the comment form is closed at this time.