Can I pay myself?
When a company is struggling, one of the first questions directors ask is whether they can still pay themselves, and the honest answer depends on how you are paid. A reasonable salary for genuine work, taken through PAYE, is generally acceptable even in difficulty, because it is a cost of the business like any other wage. Dividends are different and far riskier. Dividends can only lawfully be paid out of distributable profits, and you must be satisfied the company will remain solvent after paying them. Paying a dividend when there are no profits, or when it 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. This tool gives you a quick read, but if the company is insolvent, take advice before taking anything.
Check your position
General guidance, not advice. If the company may be insolvent, take advice from a Licensed Insolvency Practitioner before taking money out.
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.
Speak to the right expert
Tell us briefly what is happening and we will arrange a free, confidential, no obligation introduction to the right expert for your situation, whether that is a turnaround adviser, a tax specialist or a licensed insolvency practitioner. The earlier you get advice, the more options you usually have.
Free, confidential and no obligation. We are an independent information service and introduce directors to the right vetted expert for their situation. This is general information, not regulated advice.