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Where Taxpayers and Advisers Meet

Savings and Dividend income

SuperSpurs106
Posts:2
Joined:Wed Jun 15, 2022 3:25 pm
Savings and Dividend income

Postby SuperSpurs106 » Wed Jun 15, 2022 3:30 pm

Hi

I have a client with savings income of £2,000 and dividend income of £20,000.

How much personal allowance would the client have left to use against his dividend income in this scenario?

Would the PSA of £1,000 be used against the savings allowance first, then £1,000 of the personal allowance leaving remaining personal allowance of £11,570.

Or, is the personal allowance used first (£2,000) leaving £10,570 remaining (and effectively rendering the PSA useless)?

TIA

JRG
Posts:420
Joined:Wed Feb 03, 2010 4:40 pm

Re: Savings and Dividend income

Postby JRG » Wed Jun 15, 2022 11:58 pm

From my own experience, and assuming your client is a basic rate taxpayer, the £1,000 savings allowance is deducted from the total savings amount, and the £2,000 dividend allowance is deducted from the total dividends amount.
Therefore £1,000 of savings and £18,000 of dividends will be charged at the appropriate rates.
If your client is a higher rate taxpayer the savings allowance is reduced to £500.

Jholm
Posts:272
Joined:Mon Mar 11, 2019 4:22 pm

Re: Savings and Dividend income

Postby Jholm » Thu Jun 16, 2022 9:04 am

Is this the only income?

If so, allocate all PA to dividends since the interest is within the SRB of £5,000.

Jholm
Posts:272
Joined:Mon Mar 11, 2019 4:22 pm

Re: Savings and Dividend income

Postby Jholm » Thu Jun 16, 2022 9:06 am

PS your tax return software should calculate it as such, in the most beneficial allocation of PA. If it doesn't tell you the tax is £407.25, file by paper.

Assuming this is the only income, of course.


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