Can the income personal allowance be offset against whichever income an individual chooses?
So if it reduces the overall level of tax payable, could you decide to offset it against dividend income first, then savings or earned income?
As an example, if, in 20/21, an individual has salary of £10,500, £500 savings interest and £4,000 dividends.
If she offsets personal allowance against the salary first, then against the dividends, she avoids tax altogether as the additional £2,000 dividend and the £500 savings interest will be covered by their respective allowances.
If instead she offsets it first against her salary, then the savings, then the dividends, the last £500 of the dividend becomes taxable at 7,5%.
Have I got this right?
Thank you
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