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Where Taxpayers and Advisers Meet

Do dividends count as 'income' for starting rate of savings?

DJ314159
Posts:58
Joined:Wed Aug 06, 2008 3:34 pm
Do dividends count as 'income' for starting rate of savings?

Postby DJ314159 » Wed Sep 20, 2023 4:30 pm

Do dividends count as 'income' for starting rate of savings? Thanks.

Jholm
Posts:386
Joined:Mon Mar 11, 2019 4:22 pm

Re: Do dividends count as 'income' for starting rate of savings?

Postby Jholm » Thu Sep 21, 2023 10:15 am

Only non-savings income up to £5k over the PA is considered when working out how much starting rate band applies.

DJ314159
Posts:58
Joined:Wed Aug 06, 2008 3:34 pm

Re: Do dividends count as 'income' for starting rate of savings?

Postby DJ314159 » Thu Sep 21, 2023 3:28 pm

Ok, to clarify then: dividends count as savings income? Non-savings being wages and pensions, for example.

D&C
Posts:170
Joined:Mon Nov 25, 2019 11:35 pm

Re: Do dividends count as 'income' for starting rate of savings?

Postby D&C » Thu Sep 21, 2023 9:42 pm

Ok, to clarify then: dividends count as savings income? Non-savings being wages and pensions, for example.
Dividends are taxed as dividends and savings interest is taxed as interest.

You need to know your (taxable) non savings non dividend income to know if you have any savings starter rate band available.

If you do then any interest which falls in the savings starter rate band will be taxed at 0%.

If there is no Personal Allowance allocated to your dividend income then it will all be taxed at one (or more) of the four dividend tax rates. But it won't be part of the savings starter rate band.

strawn
Posts:96
Joined:Fri Jun 01, 2012 10:11 am

Re: Do dividends count as 'income' for starting rate of savings?

Postby strawn » Thu Sep 21, 2023 11:47 pm

"Do dividends count as 'income' for starting rate of savings? Thanks."

It depends on what you mean. I think you clarified it with "Ok, to clarify then: dividends count as savings income? "

My understanding is that dividends do NOT count as savings income; that is to say, you get to set your dividend income against your dividend allowance not against either of your savings income allowances. They are reserved for interest e.g. from savings accounts, gilts, or the like.

Your personal allowance can be set against all income: pay and pensions, rent, interest, dividends, ...


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