I know virtually nothing about how the tax system works so please excuse me if this is a stupid question.
Just received 18/19 tax code notice. It states personal allowance is £11850. I get that - first £11850 of earnings come tax free. Then it states Less Dividend Tax of X making the actual tax free amount significantly lower. Why is the personal allowance lowered by Dividend Tax? My logic suggests that a tax free allowance is just that and tax will not be incurred until after that figure has been reached in earnings. Surely any dividend tax should be charged on dividends paid over and above salary and also only after they exceed the £2000 mark (what I gather is the amount of dividend revenue one can earn before the dividend payments are taxed).
Flummoxed and looking for an easy to understand explanation.
Thanks very much in anticipation.
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