It seems from the calculation below for 2014-15 (taken from HMRC online) the use of the dividend tax credit is limited to the lower of the tax credit (10% of gross dividend) and 10% the income on which tax is due.
Here £500 of dividend tax credit is lost because the self-employment income was £5,000 below the PA.
This seems to be a new rule as I always understood that the limitation was simply to not allow a refund of the tax credit.
Can anyone explain?
|Profit from self-employment||£5,000.00|
|Dividends from UK companies (plus 10% tax credits)||£80,000.00|
|Total income received||£85,000.00|
|minus Personal Allowance||£10,000.00|
|Total income on which tax is due||£75,000.00|
How we have worked out your income tax
|Dividends from companies etc||£31,865.00||@ 10%||£3,186.50|
|Total income on which tax has been charged||£75,000.00|
|Income Tax charged||£17,205.37|
|minus 10% tax credits on dividends from UK companies (not repayable)||£7,500.00|
|Income Tax due after dividend tax credits||£9,705.37|
|From all employments||£0.00|
|Total Income Tax due||£9,705.37|