£5000 nil band rate

bjbyorkshire

Can someone clarify when this figure is used in a tax assessment.

Husband has received a tax code for this year and one for next year. Both include the marriage allowance that I have given him but not the £5000 nil band rate.

I have read and re read an article posted on here somewhere and am still not sure where and when this figure comes into play.

Thanks

anselld

The £5000 is for dividend income so it has nothing to do with the tax code which is used only for PAYE income.

bjbyorkshire

That's not as I was reading it on a Which? site.

It does say that it's for dividend income but directly above that it says for savings income the same figure has come in for the last tax year too.

CLAPTON

bjbyorkshire wrote: »

That's not as I was reading it on a Which? site.

It does say that it's for dividend income but directly above that it says for savings income the same figure has come in for the last tax year too.

neither the savings allowance nor the dividend allowance form part of the tax code as such : the taxcode is use by PAYE system to calculate your tax based on your salary.
If you are due to pay tax on divi or interest then that will be calculated after year end
It may be that HMRC will adjust your following years taxcode downwards to recover some of this

bjbyorkshire

Ok, so the tax code will not be used but does this mean roughly that the £5000 plus the £1000 are added together and used to offset the tax due on any interest and earnings above the£10,600 or £11,000 limit?
We have no dividends.

Thanks for the replies but the figures are still as clear as mud?

polymaff

bjbyorkshire wrote: »

Thanks for the replies but the figures are still as clear as mud?

You planted some of the mud yourself in your original post by not being explicit about which £5,000 you meant. (Yes, I know it can be deduced - but it is better to be unambiguously explicit)

The Starting Rate Allowance (SRA) will not appear in all tax statements as it is only available when Taxable Non-Savings Income is less than the Personal Allowance plus the SRA. Is this the case?

bjbyorkshire

As I read the last paragraph, several times, my answer will be "I don't know". I'm not a dunce but I seem incapable of understanding the words.

This is just a guesstimate but as an example:

State Pension + Occupational Pension = £18,000
Savings interest may be over £1,000
Small extra income at present paid separately in January each year.
I gave him my marriage allowance this year.

Does this help you to explain the £5000 nil band rate or shall I just give up on it all.

polymaff

bjbyorkshire wrote: »

As I read the last paragraph, several times, my answer will be "I don't know". I'm not a dunce but I seem incapable of understanding the words.

"The Starting Rate Allowance (SRA) will not appear in all tax statements as it is only available when Taxable Non-Savings Income is less than the Personal Allowance plus the SRA. Is this the case?"

Your Taxable Non-Savings Income is £18,000

The Personal Allowance plus the SRA is £10,600 plus £5,000

£18,000 is NOT less than £10,600 plus £5,000

So you don't get the SRA.

Just like that

bjbyorkshire

Well, that's not what I hoped for but I now sort of understand.

Was the nil band rate introduced to give lower income earners a bit more money in their pockets?

polymaff

bjbyorkshire wrote: »

Well, that's not what I hoped for but I now sort of understand.

Was the nil band rate introduced to give lower income earners a bit more money in their pockets?

Exactly. You're too rich

Edit: Thought about deferring the state pension?

CLAPTON

bjbyorkshire wrote: »

Well, that's not what I hoped for but I now sort of understand.

Was the nil band rate introduced to give lower income earners a bit more money in their pockets?

better to understand how things work, than ponder their intent