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Dividend Allowance £2k

How is it utilised?

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A client has £300k of employment income and £500 of dividends. As the non savings income is taxed first and she is an additional rate tax payer, am I right in saying the £500 is fully covered by the £2k allowance and not subject to any further tax? Or am I missing something here? I know if dividends are taxed at basic rate (not the case here) the £2k allowance uses up £2k of the BRB but that is not the case here.

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By Not Anonymous
02nd Feb 2020 11:02

There is no such "allowance".

The £500 will be taxed at the dividend nil rate (0%). It would use some of the additional rate band. Which currently has no upper limit. Even in Scotland!

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RLI
By lionofludesch
02nd Feb 2020 12:09

In short, no tax on £500 of dividends.

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Replying to lionofludesch:
By SteLacca
03rd Feb 2020 10:45

lionofludesch wrote:

In short, no tax on £500 of dividends.

Ever.

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Replying to SteLacca:
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By Not Anonymous
03rd Feb 2020 12:20

SteLacca wrote:

lionofludesch wrote:

In short, no tax on £500 of dividends.

Ever.

Although the £500 could of course make the overall liability more for some people (though not the one this question was asked about).

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Replying to Not Anonymous:
RLI
By lionofludesch
03rd Feb 2020 12:34

Not Anonymous wrote:

Although the £500 could of course make the overall liability more for some people (though not the one this question was asked about).

Absolutely. Whilst not, apparently, applicable in this case, it could lead to the withdrawal of personal allowances or a HICBC charge.

It's not true to say £500 in dividends will always be tax free.

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