I've just completed a tax return with the following income details:
Foreign pension (after 10% deduction) £15,672
This gives total taxable income of £46,255 which, after deducting the PA, gives chargeable income of £35,255. My automatic expectation therefore is that there will definitely be higher rate tax involved, and this will be on the dividends as they are top slice.
IRIS'S calculation is showing the following:
£500 (starting rate) at 0%
£5,000 (dividend rate) at 0%
£29,755 (basic rate) at 20%
There are no reliefs available to extend the BR band so I'm confused as to how they arrived at this outcome. I wondered if it might be the savings rate band but I think the other income is too high to allow this. Maybe it's the foreign income affecting it? The guy I spoke to says it's definitley right and that the dividend rate doesn't affect the BR band which I believe is bollox!
I believe the position should be as follows:
£500 @ 0%
£27,745 @ 20%
£5,000 @ 0%
£2,000 @ 32.5%
Am I right? And if not, where am I going wrong?
It's been passed to the senior staff at IRIS (whatever that means!) but they're taking bloomin ages to get back to me and it's driving me up the wall.
Thanks in advance!