Hi
One of my clients has the following income for 18/19: -
Dividends: £3,148
Bank Interest: £675
Pension income: £10,702
He calculated the £10,702 as being the most he could draw down tax free from his SIPP.
The pension will be incorporated by the personal allowance, leaving £1,148 of the pa remaining.
Will the savings or dividends use up this remaining £1,148 or can you now choose which to use first?
If we offset the savings against the pa first, then this means only £473 of the dividend is covered by the pa. Another £2,000 divi is within the divi allowance and the remaining £675 dividend taxed at 7.5%.
If we offset the dividends first, the whole dividends would be tax free (£1,148 within the pa and £2,000 dividend allowance). The £675 savings is then covered by the £1,000 savings allowance, so tax altogether avoided.
Thanks
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