Savings free of tax for total incomes less than £15,500 from April 2015

TCA

TCA wrote: »

so I'm wondering if someone with say a wage of £10k, bank interest of £5k and dividend income of £10k, would effectively only pay the 10% tax on dividends already deducted at source?

le_loup wrote: »

Income is income is income.

Meaning in my example, 20% tax would still be payable on the bank interest?

zagfles

TCA wrote: »

How do the new rules work with regard to dividend income?

"This will mean that anyone with a total income (including wage, pension, benefits and savings income) of less than £15,500"............

I haven't seen dividends specifically mentioned anywhere, so I'm wondering if someone with say a wage of £10k, bank interest of £5k and dividend income of £10k, would effectively only pay the 10% tax on dividends already deducted at source?

Yes dividends are the top slice see http://www.hmrc.gov.uk/manuals/saimmanual/saim1090.htm

TCA

Thanks zagfles. I understand they're top slice but I was thinking from the perspective that the other income sources were tax-free under the new rules. I was optimistically hoping that if the salary is below the personal allowance and savings interest is below the new £5k band and dividends already taxed, then there might be a small opportunity regarding divis, seeing as they weren't specifically mentioned. Clutching at straws of course. The most relevant bit from your link for me is probably:

"Where an individual’s non-savings income exceeds the starting rate limit for savings, the starting rate limit for savings is not available for the savings income. The individual’s savings income will be taxable at the basic rate up to the basic rate limit, and at higher rate above that."

So even with new rules, the above still applies in my example, as total income exceeds £15,500. As le loup said, income is income.

DragonQ

Chadsman wrote: »

A PhD is never finished... it is abandoned.

True haha.

I will miss not paying income tax, council tax, or national insurance.

Archi_Bald

DragonQ wrote: »

I will miss not paying income tax, council tax, or national insurance.

Well who likes to pay taxes....but we all like to have our bins emptied, streets lit and cleaned, potholes repaired, police at hand if we get threatened, and a doctor at hand when we need one etc etc

Will you give all that up alongside giving up paying taxes and NI? Or expect someone else to pay for you?

zagfles

TCA wrote: »

Thanks zagfles. I understand they're top slice but I was thinking from the perspective that the other income sources were tax-free under the new rules. I was optimistically hoping that if the salary is below the personal allowance and savings interest is below the new £5k band and dividends already taxed, then there might be a small opportunity regarding divis, seeing as they weren't specifically mentioned. Clutching at straws of course. The most relevant bit from your link for me is probably:

"Where an individual’s non-savings income exceeds the starting rate limit for savings, the starting rate limit for savings is not available for the savings income. The individual’s savings income will be taxable at the basic rate up to the basic rate limit, and at higher rate above that."

So even with new rules, the above still applies in my example, as total income exceeds £15,500. As le loup said, income is income.

That's not my understanding, though I guess it could be read that way. AIUI if dividend income is the top slice then someone (next tax year) with £10.5k earnings, £5k interest and £10k dividends, the £5k interest would fall in the zero band for savings as it's the second slice, the dividends being the top slice. I think the bit you quoted above is just to point out that someone with £15.5k plus earnings wouldn't get the 10% band on savings.

Income is not just income, otherwise we wouldn't need these complicated rules as to what's the top slice etc!