You are the director and sole shareholder of ABC Ltd. Your company Income Statement for the company year to 31st March 2020 is as follows:
Revenue £200,000 (A)
Costs and Expenses £120,000 (B)
PBT (profit before tax) £80,000 (C) = (A)-(B)
Corporation Tax at (19%) £15,200 (D) = (C) x 19%
PAT (profit after tax) £64,800 (E) = (C)-(D)
The vital number here is E, profits after tax. This is the amount that is available to pay all shareholders as a dividend. The board/directors do not have to pay out the whole amount, it is at their discretion as to how much (or all) of this amount should be paid out in dividends. In addition to this, there may be historical tax implicated reserves (in plain English, profits after tax from previous years that were never paid out as dividends, in part or full) that also are available to pay as dividends to shareholders
Remember – Dividends must only be paid out from profits after tax + historical distributable reserves.