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Definition
An interim dividend is declared and paid by directors during the financial year, based on interim profits, before the final dividend is set at year end. It must still be supported by distributable reserves at the time of payment.
In plain terms
It is a "pay as you go" dividend, common for owner-managed companies drawing profit through the year. But paying it when reserves are absent is still unlawful.
Why it matters for your company
Interim dividends need up-to-date management accounts to prove profit exists at the payment date. Keep the paperwork tight. See dividend cover.
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