Can I pay myself?
When a company is struggling, whether you can still pay yourself depends on how you are paid. A reasonable salary for genuine work, taken through PAYE, is generally acceptable, but dividends can only lawfully be paid out of distributable profits and must not leave the company unable to pay its debts.
Check your position
General guidance, not advice. If the company may be insolvent, take advice from a Licensed Insolvency Practitioner before taking money out.
Why dividends carry the risk
A salary is a cost of the business like any other wage. A dividend paid when there are no profits, or one that tips the company into insolvency, is unlawful: it can be reclaimed, treated as an overdrawn director loan account, and counted against you if the company later fails. As insolvency deepens, the duty to put creditors first also means you must avoid preferring yourself over them.
Common questions
Can I take dividends if my company is insolvent?
No. Dividends can only be paid from distributable profits, and a director must be satisfied the company remains solvent after paying them. Paying dividends from an insolvent company is unlawful and can be clawed back and treated as a director loan.
Can I still take a salary?
A reasonable salary for genuine work, paid through PAYE, is generally allowed even when a company is struggling, but in deepening insolvency you must be careful not to prefer yourself over creditors. Take advice if unsure.
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Free, confidential and no obligation. We are an independent information service. Getting in touch does not appoint an insolvency practitioner or create a professional engagement. We review your situation and reply with what we think the right next step is. This is general information, not regulated advice.