Hoping someone may have come across this and knows the explanation.
We've run a calculation for a client that seems wrong, but after checking with our software provider they've given us the HMRC calculation confirming their figures. We still think it's wrong though.
These are example figures but give the same issue as the actual ones:
Employment income £54,000
Net pension contributions £19,200
The salary is taxed under the Scottish bands, £2000 @ 19%, £34,150 @ 20%, £6000 @ 21%.
The interest and dividends are taxed under the UK regime, interest is £500 @ 0% and £5,700 @ 20%
Dividends are taxed £2,000 @ 0%, £2,150 @ 7.5% and £10,850 @ 32.5%
Can anyone explain why the figure for dividends being taxed at 32.5% is £10,850? We're all sure it should be £4,850, the difference is the same as the amount taxed at 21% under employment income. This holds true with our real world example as well where the figure is something more precise, so I'm sure it's no coincidence.
Basic rate bands are extended by 5/4 x £19,200, £24,000, so are £34,150 for Scotland and £58,500 for England. The amount of income being taxed at basic rate is £52,500.
Posting as anonymous as I don't particularly want anyone in my office knowing my account name and this puzzle has been all round the office. I am a regular poster on here though.
Edit: to respond to the point below, we are not in dispute about the use of the personal allowance, HMRC and our calculation allocate it in full to the salary. The issue is that HMRC's calculation appears to deduct the amount taxed in the Scottish Intermediate band from the available basic rate band twice.