2015/2016 income comprises a salary of £5000 and (net) dividend of £50000. Personal allowance £10600. Is the additional tax payable £3528.25 or £4088.25?
Replies (12)
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I disagree
The liability is £4088.25
But the OP is asking for the amount of tax payable which is £3528.25
Are you sure
I disagree
The liability is £4088.25
But the OP is asking for the amount of tax payable which is £3528.25
Are you sure:
Salary £5,000.00
Dividends net £50,000.00
Tax credit on Div £ 5,555.55
Gross Income £60,555.55
Personal Allowance£10,600
Taxable £49,955.55
B Rate 31,785
H Rate 18,170.55
Tax @ 32.5% on higher rate £5905.43
Tax credit on higher rate £1.817.06
Tax now payable £4,088.37
Or Gross dividends in Higher Rate £18,170.55
Net equivalent £16,353.50
Tax @ 25% on net £4,088.37
Me too
I disagree
The liability is £4088.25
But the OP is asking for the amount of tax payable which is £3528.25
I disagree with your disagreement.
You can't use your personal allowance against dividend income.
I think you can use personal allowance against dividend income - you just can't have a repayment of dividend tax.
I think tax payable is £3528.25
Same thing
I think you can use personal allowance against dividend income - you just can't have a repayment of dividend tax.
Sure, it's what the legislation says, so it is. But in reality, it's the same thing.
Tax credit?
Isn't the tax credit being abolished from 6/4/2015? (i.e. there should be no such thing as a net dividend in this calculation) or am I getting ahead of myself.
EDIT : Yes, moment of madness. That's 6/4/2016 isn't it.
I am in the
£4088 camp. dividend credit restricted to £4,995 as £5,600 of the dividend falls within the personal allowance (giving the difference of £560)
Bizarre. Quite a long thread for such a basic question that was answered correctly in the first response. I hope that those who think the first answer was wrong will be doing a bit of CPD.
Tim if it makes you feel any better, I have seen longer threads on more fundamental subjects.