Can I take dividends or salary when the company is struggling?
Dividends require sufficient distributable profits and proper approval; cash in the bank alone is not enough. Salary, expenses and director’s loan withdrawals have different rules. When insolvency is a concern, obtain advice before taking money out and consider the effect on creditors.
Business Insolvency Helpline • Checked 1 November 2026
General guidance, with procedural detail focused on England and Wales. Rules and routes can differ in Scotland and Northern Ireland.
What makes a dividend unlawful?
A payment described as a dividend may be unlawful if the company lacks available profits or the required process has not been followed. Keep the accounts, minutes and dividend vouchers supporting each distribution.
Historic profits do not answer every question if the position has since deteriorated. Ask the accountant to review up-to-date figures and distinguish accounting profit from cash required for tax and other liabilities.
Can I still receive salary or expenses?
Genuine contractual salary and properly evidenced business expenses are different from dividends. That does not make every payment appropriate in a distressed company. The amount, basis, timing and creditor impact need assessment.
Do not relabel withdrawals after the event to conceal the true position. Record what each payment was and reconcile the director’s loan account accurately.
What happens during liquidation?
The liquidator can examine director payments and distributions. Repayment or other recovery claims may arise depending on the facts. An overdrawn director’s loan is an asset of the company and can be pursued.
If the company owes you money instead, keep evidence of the lending but do not give yourself priority in repayment. Plan personal living costs separately from the company’s available funds.
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Related questions
Not on that basis alone. Available distributable profits and the required approval process must be established.
Yes, repayment or other claims may arise. The circumstances and recipient’s knowledge are relevant to the legal position.
Obtain advice first. A payment to a director or connected person can be scrutinised and may be recoverable.
Sources checked for this guide
- Director information hub dividends (www.gov.uk)
- Director information hub antecedent transactions (www.gov.uk)
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