So I return from holiday to a dead computer (now revived through a sort of computer heart and lung machine) then take a look at the dividend "fact"sheet produced by HMRC. Have they made an error in Example 3 in their explanation, though not in their liability?
Example 3 says this:
“I have a non-dividend income of £6,500, and a dividend income of £12,000 from shares outside of an ISA”
Their answer says:
"With a Personal Allowance of £11,000, £7,500 of the dividends are under the threshold for tax. A further £5,000 comes within the Dividend Allowance, leaving tax to pay at Basic Rate (7.5%) on £2,500."
Now when I was at school £7,500 plus £5,000 plus £2,500 was £15,000 not £12,000
The total income is clearly £18,500 and after the deduction of the personal allowance of £11,000 it leaves £7,500 within the charge to tax. Dividends are the top slice of income so all of the £7,500 is dividend income. £5,000 of this is charged at the nil rate (the dividend "allowance") and that leaves £2,500 to be charged at 7.5%. Surely it should say "with a personal allowance of £11,000, £5,500 of the dividends are under the threshold for tax" - shouldn't it?