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Personal Allowance distribution

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So far the bulk of the discussion has been limited to two-component examples.  How about these four three-component, 2016/17 examples? What do you/your sytem make the optimal total tax liability and the PA split to be?

a) Non-Savings: £10,000  Savings: £30,000  Dividend: £9,000

b) Non-Savings:   £9,000  Savings: £31,000  Dividend: £9,000

c) Non-Savings: £10,000  Savings: £35,000  Dividend: £9,000

d) Non-Savings:   £9,000  Savings: £36,000  Dividend: £9,000

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Stepurhan
By stepurhan
14th Jun 2017 20:24

It's good form to show ones own answers first for questions like this.

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Replying to stepurhan:
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By emanresu
15th Jun 2017 18:52

stepurhan wrote:

It's good form to show ones own answers first for questions like this.

I'd imagined that AW'ers would be keener to find out how commercial systems respond to these cases, rather than how I do. As the response has been what it has, though, I'll oblige.

a) Non-Savings: £10,000 Savings: £30,000 Dividend: £9,000 - Tax: £5875.00, £10k to non-savings, £1k to dividends

b) Non-Savings: £9,000 Savings: £31,000 Dividend: £9,000 - Tax: £5750.00, £9k to non-savings, £2k to dividends

c) Non-Savings: £10,000 Savings: £35,000 Dividend: £9,000 - Tax: £7400.00, £10k to non-savings, £1k to savings.

d) Non-Savings: £9,000 Savings: £36,000 Dividend: £9,000 - Tax: £7400.00, £9k to non-savings, £2k to savings.

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By halblackburn
16th Jun 2017 10:59

CCH shows all the examples as falling under Exclusion 51, so the CCH tax computation is likely not optimal.
For the record (CCH 2017.1):
(a) -/8/3 £6,625.00;
(b) -/8/3 £6,625.00;
(c) -/11/- £8,400.00;
(d) -/11/- £8,400.00.

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Replying to halblackburn:
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By emanresu
16th Jun 2017 12:57

Thank you. At least CCH flags up the incompatability.

Quite a difference in the assessments. I take it that CCH doesn't offer an "if HMRC had got it right it would have been" mode?

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By halblackburn
16th Jun 2017 13:21

With CCH (release 2017.1) as each new item of income is entered the screen tax calculation is updated but there is no immediate indication that an exclusion applies.

CCH only flags an exclusion when you move on to validate the tax return data prior to generating an IRMark.

Therefore you can't rely on the screen tax calculation until the tax return data is validated. Thanks to the OP for making me think this through.

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Replying to halblackburn:
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By emanresu
16th Jun 2017 14:39

halblackburn wrote:

Thanks to the OP for making me think this through.

There has been a lot of discussion/confusion on AW about this topic. I made up these examples to challenge some assumptions; to use all key facets of 2016/17 - the SRA in particular (that's why HMRC mis-calculates them) - and to show how in a three component case the PA, perhaps counter-intuitively, can drain *away* from dividend relief.

Let's hope that others will find the exercise thought-provoking !

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