Dividend waiver template for contractors

As outlined today on ContractorUK, a shareholder is entitled to waive their rights to receive a dividend from the company, writes Siddharth Agarwal, tax director at DNS Associates.

This dividend waiver would entitle the company to retain the funds and use it for a specific purpose. But the waiver must be used for genuine commercial reasons and furthermore, it is recommended that you consider seeking specialist tax advice on the Settlements legislation to avoid falling foul of the Income Tax (Trading & Other Income) Act 2005.

To waive their entitlement to a dividend, the shareholder must provide the company with a waiver in the form of a formal document which should be signed, dated and witnessed. The waiver must ideally be received by the company before the right to earn the dividend arises.

Below is a template which contractors can use for their dividend waiver. Available too as a download, this dividend waiver template is ideal for any shareholder who wants to waive their rights to receive a dividend from a company.

Please note, the requisite information should be inserted between the fields marked < > and can be adapted to suit your particulars and requirements.

***** DIVIDEND WAIVER TEMPLATE STARTS *****

The Directors

<Company Name>

<Company Address Line 1>

<Company Address Line 2>

<City>

<Postcode>

<Date>

Ref: Waiver of Dividend

I, <full name>, the registered holder of <number of shares> <share class> shares of £<nominal value of shares> each in the capital of the Company.

In order to <state your reason for waiving dividend rights, example: expand the business>, I hereby irrevocably waive all the rights and entitlement to the <interim/final> dividend of <amount> per share recommended by the directors on <declaration date> for the year ended <Year end date>.

Further, I am not entering into any arrangements which meant to have ‘an element of bounty’ laid down under the Settlement legislation at ITTOIA05/PART5/CHAPTER5 or to circumvent the company law and taxation authorities.

Signed as a deed by:

Signed: ……………………………………………

<Your Full Name>

Date: ……………….

In presence of:

Signed:            ……………………………………………

<Witness Name>:……………………………………………

Address: ……………………………………………

Address: ……………………………………………

Post Code: ……………………………………….

Date: ……………….

***** DIVIDEND WAIVER TEMPLATE ENDS *****

You can download our dividend waiver template here.