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IRIS'S tax calculation - is it wrong?

2016/2017 tax calculation doesn't look right and they are disagreeing

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I've just completed a tax return with the following income details:

Salary   £8,060

Foreign pension (after 10% deduction)   £15,672

Dividends   £7,000

Interest   £7,699

NIRP   £7,824

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!

Replies (2)

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By lionofludesch
06th Jul 2017 16:09

Life's very complicated these days but I would allocate the personal allowance

General 1801
Interest 7199
Dividend 2000

That leaves

General 29755
Interest 500
Dividends 5000

Interest is covered by the savings allowance.

First £29755 is charged at 20%

Dividends are covered by Dividend Allowance.

So I agree with Iris.


Thanks (4)
Replying to lionofludesch:
By northernmonkey
07th Jul 2017 12:55

Thank you Lion, I can see that now.

Very much appreciated.

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