I have a personal income of 60,000 GBP (Salary) and Dividends (15,000) from shares not ISA.
I am high rate tax payer, having 12,500 allowance. Understand the band to high rate is at 37,500 and the dividend rates are:
7,5 % LR, 32,5 % HR
How much dividend tax do I need to Pay.
Is it correct under stood 2,000 dividend is tax free the remaining: 13,000 is taxed at 32,5%??
Related resources
Replies (4)
Please login or register to join the discussion.
you are correct 32.5% * £13,000 = £4,225
Unless you can afford to put £23,000 into a pension fund, in which case the dividend payment will fall into the lower tax bracket.
Assuming that both the op's "salary" is referring to taxable pay (figure which will be on P60) and your £23k pension contribution is the gross amount of a relief at source contribution then the op would still be liable to higher rate tax on £2,000 of the dividend income.
Total income £75,000
Basic rate band is £60,500
£75,000 less PA £12,500 = £62,500 remaining to be taxed
Earnings of £47,500 taxed at 20%
Dividends of £2,000 taxed at 0%
Dividends of £11,000 taxed at 7.5%
Dividends of £2,000 taxed at 32.5%
£4225 plus £2112 plus£ 2113 perhaps due in 6 months to 31 July.
£8450.
Though there are assumptions made to arrive at £8450
Pension cash flow closer to_£ 18000.
Too late for 2019 20.
Other issues to address, perhaps;
HICB
Time to pay arrangement
Do you have a pension plan?