Foreign tax credit with £5,000 dividend allowance

[FigNewton]

Does anyone understand how the new £5,000 Dividend Allowance for 2016-17 will work in conjunction with foreign tax credits? Suppose one has £3,000 UK company dividends, and £3,000 US company dividends, from which the IRS has taken 15% withholding tax. Suppose [iOther income + dividends = 44,000 , so dividends taxed at both 7.5% and 32.5%. Is the HMRC tax therefore as follows?

charge on £3,000 of UK dividends = 0 (Dividend allowance)
charge on £2,000 of US dividends = 0 (Dividend alllowance)
7.5% charge on £1000 of US dividends = 75
32.5% charge on £1000 of US dividends = 325
less 15% US tax on £2,000 = -300
UK tax due = 100

or is there a possibility to somehow take a credit for more of the US withholding tax, i.e. 15% of 4000 = 600?

[FigNewton]

typo: I meant

Does anyone understand how the new £5,000 Dividend Allowance for 2016-17 will work in conjunction with foreign tax credits? Suppose one has £3,000 UK company dividends, and £4,000 US company dividends, ...

[maths]

5,000 dividend allowance offset against 3,000 UK divs then against gross non-UK divs of 4,000 thus leaving non-UK divs of 2,000 charged to tax.

If non-div income is 44,000. Less personal allowance of 11,000 gives 33,000.

All foreign divs thus taxable at 32.5%.

2,000 @ 32.5% gives 650.
Foreign tax credit lower of 650 and [15% of 2,000].

[FigNewton]

Basic rate limit is 32,000, so with income less personal allowances coming to 33,000, don't 1,000 of dividends falling below the 32,000 get taxed at 7.5% and another 1,000 falling above the 32,000 get taxed at 32.5%? This is how I interpret HMRC comment that one can pay dividend tax at more than one rate. Or does total income just £1 over 32,000 mean that all dividends now atttact the 32.5% rate?

[maths]

Dividends can, as you say, be subject to income tax at the various rates. This depends upon whether the dividends in whole or in part fall into the basic rate band etc.

In your example, the non-dividend income after personal allowance already exceeds the 32,000 basic rate limit.
Hence, the aggregate dividends fall within in the higher rate band of 32.5% (albeit less the 5,000 allowance).

[FigNewton]

Thanks for your help. But my example was: other income + 6000 dividends = 44,000. So minus 11,000 makes 33,000. Non-dividend income minus 11,000 is 27,000, so that is not yet in higher rate band, no? That was the point of my choice of number, to get the dividends income in two bands.

[FigNewton]

income + 7000 dividends = 44,000

(I've been unable to find a way to edit posts for typos in this forum! Is it impossible?)

[maths]

Thanks for your help. But my example was: other income + 6000 dividends = 44,000. So minus 11,000 makes 33,000. Non-dividend income minus 11,000 is 27,000, so that is not yet in higher rate band, no? That was the point of my choice of number, to get the dividends income in two bands.

Other income 38,000.
Less PA 11,000 gives 27,000.

That leaves 5,000 of the basic rate band.

Thus, 5,000 of divs taxed at 0%.

Thus, remaining 1,000 of divs subject to 32.5%.