Tax on Income + Savings Interest + Dividends

Gatser

If 2019-20 Income is:
Private Pension    £6,000 ;   Savings Interest  £12,000  ;  Dividends £3,000
Tax Code 1250L
What tax would be payable please?   (Just making sure I understand the logic!)   Thanks for your help...

Dazed_and_C0nfused

£75.  Assuming the only entry in the tax code is Personal Allowance of £12,500

Dazed_and_C0nfused

Scrap that, £37.50

RG2015

Dazed_and_C0nfused said:

£75.  Assuming the only entry in the tax code is Personal Allowance of £12,500

Dazed_and_C0nfused said:

Scrap that, £37.50

Can you explain this please?

The way I read the rules is as follows:

Pension and interest £18,000 less personal allowance of £12,500 and savings starting rate of £5,000 leaves £500 at 20% which is £100 to pay.

In addition the £3,000 dividend income less £2,000 dividend allowance leaves £1,000 at 7.5% which is a further £75.

Gatser

My calculations are:
Personal Allowance 12500 less Pension 6000 = 6500 allowance remaining
Savings Int 12000 less Starting Rate 5000 less Personal Savings Allowance 1000 = 6000
Then Allowance 6500 less Net Savings Interest 6000 = 500 allowance remaining
Dividends 3000 less 2000 divds allowance = 1000 less 500 allowance remaining = 500
500 x 7.5% = £37.50 Tax Due
I agree with your calc Dazed and COnfused…. hope we are correct!
Thanks for your help....

  

 

noh

You haven't taken the personal savings allowance into account. That would give you a rate of 0% on the £500.
The only tax due would be 7.5% on £1000 of dividends. A total tax bill of £75.
You would still have £500 of PSA unused so could potentially earn £500 more savings interest without paying any more tax.

Dazed_and_C0nfused

If you allocate your Personal Allowance like shown below how much does it leave to be taxed?

£6,000 Pension
£6,000 Interest
£500 Dividneds

Dazed_and_C0nfused

RG2015 said:

Dazed_and_C0nfused said:

£75.  Assuming the only entry in the tax code is Personal Allowance of £12,500

Dazed_and_C0nfused said:

Scrap that, £37.50

Can you explain this please?

The way I read the rules is as follows:

Pension and interest £18,000 less personal allowance of £12,500 and savings starting rate of £5,000 leaves £500 at 20% which is £100 to pay.

In addition the £3,000 dividend income less £2,000 dividend allowance leaves £1,000 at 7.5% which is a further £75.

You have forgotten about the savings nil rate.

And there is no allowance for dividends, all £3,000 in your example would be taxed, albeit £2,000 at 0%.

RG2015

Just worked in out. The £1,000 personal savings allowance leaves an unutilised allowance of £500 which reduces the taxable dividend income to £500 at 7.5% which is £37.50.
I knew to trust @Dazed_and_C0nfused just couldn't quite see it.

noh

Its £75 tax due.
You can't use the £500 unused PSA to offset the dividend income.

Dazed_and_C0nfused

You can't use the £500 unused PSA to offset the dividend income.

True but I think you are missing the point.  If you allocate the Personal Allowance like shown below what income is left to be taxed?

£6,000 Pension
£6,000 Interest
£500 Dividends