Postby Lambs » Tue Mar 24, 2020 11:36 am
For 2019/20:
Assuming -
Salary of £114k, tax deducted to cover only salary through PAYE = £35,900
Rental income of £6,276, with no expenses such as mortgage interest to set against it
Dividend income of £35k
He will be an Additional Rate taxpayer as he will go a little above £150k in total income.
The additional tax liability for the year on that extra £41,276 will be £15,730.
This will be:
£6,276 @ 40% = £2,510
£27,724 @ 32.5% = £9,010
£5,276 @ 38.1% = £2,010
Plus forfeiture of £5,500 PA = £2,200
Total = £15,730
For 2020/21:
Assumptions as above but with no dividend income:
Additional tax due will be £3,765
Tax on rental income = £2,510
Further loss of £3,138 PA = £1,255
Total = £3,765
This may of course change if income changes as a result of Coronavirus (or indeed anything else) and of course if further measures to combat the financial consequences of Coronavirus change the underlying calculations.
But based on the foregoing, you will have a sizable further liability for 2019/20 but you should apply to reduce your 2020/21 interim payments (31 January 2021 / 31 July 2021) to about £2k each, to cover a much lower anticipated liability for 2020/21, in the absence of any dividend income for that year.
Regards,
Lambs