Paid in dividends – am I not eligible for maternity and childcare support?

I pay my income into a limited company. I pay myself dividends. I’ve just discovered that this means I’m not eligible for the Tax free Childcare scheme and 30 hours free childcare system. We’re planning another child. Does paying myself in dividends means I’m not eligible for Maternity Allowance?

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I would suggest that you register your company for PAYE immediately and back date your PAYE start date.

The PAYE registration can be done online via a form to be completed and submitted electronically. The only problem I can see is that it might take a couple of weeks to get the PAYE reference numbers etc through from HMRC.

In terms of operating the payroll this can be operated monthly, quarterly etc. I definitely would go for the least number of payslips necessary . There are many excellent completely free payroll packages on the internet. I use Payroo (Payroo.com) which not only produces payslips but also does all the HMRC filing and end of year documentation. Registration for PAYE is free as is the Payroo software.

There is a minimum earning threshold for tax free childcare of £120 per week so as long as you pay yourself over that you will be eligible – and for maternity allowance and possibly SMP.

Comments [1]

Tony Messiou says:

10th September 2021

Hi i dont think this fully answered the question. Since dividends are taxable why are they not considered taxable income in terms of child care benefits? i have the same problem.

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