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Holiday Goggles over dividends?

Holiday Goggles over dividends?

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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?

Replies (4)

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By Steve Kesby
25th Aug 2015 13:09

Surely...

... it should say "£4,500 of the dividends are under the threshold for tax". :)

The £7,500 is, of course the amount of dividends that are taxable before the dividend allowance is deducted. All of the other numbers appear to be correct.

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By Tonykelly
25th Aug 2015 12:30

I would say £4,500

I would say £4,500 are under threshold for tax.

Non-dividend income of £6500 plus £4500 gives you your personal allowance of £11,000.

Leaving £7,500 dividend income above allowance.

£5000 tax free

£2500 at 7.5%

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The triggle is a distant cousin of the squonk (pictured)
By Triggle
25th Aug 2015 13:38

It should say:

"With a Personal Allowance of £11,000, £7,500 of the dividends are over 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."

We should all click on the "Is anything wrong with this page" link at the bottom of the page

https://www.gov.uk/government/publications/dividend-allowance-factsheet/dividend-allowance-factsheet

and be completely ignored by HMRC.

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By Paul Soper
25th Aug 2015 15:24

Thanks all

Yes it should be £4,500 - the effects of returning from Greece to London temperatures that are normal for a Shetland summer (I know because I was in Shetland a couple of years back) are clearly still being felt!  Triggle is probably closest to what they were trying to say but this is hardly clarification is it?

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