Declare Dividend?

Stegor

Hi,
My wife currently earns around £9000 and will receive dividends of around £2500 next year, making a total income of around £11500. The dividends are above the dividend allowance but the total income is below the personal allowance. Will she need to declare the dividend income to HMRC?

Thanks for your time. 

Dazed_and_C0nfused

Stegor said:

Hi,
My wife currently earns around £9000 and will receive dividends of around £2500 next year, making a total income of around £11500. The dividends are above the dividend allowance but the total income is below the personal allowance. Will she need to declare the dividend income to HMRC?

Thanks for your time. 

She probably won't be able to benefit from the dividend nil rate (aka Dividend Allowance) as that can only be used once the Personal Allowance has been used.

No material impact on your wife but you seem to think she can use the nil rate band and she will only be able to use (some of) that if her Personal Allowance is £11,310 not £12,570.

Stegor

Hi, thanks for the reply. I understand the dividend allowance doesn't come into play until she has used up her personal allowance, but does she still need to declare the dividend income to HMRC? Thanks again.

george4064

What type of account is the shares/investments that are paying the dividends held in? 

eskbanker

Stegor said:

Hi, thanks for the reply. I understand the dividend allowance doesn't come into play until she has used up her personal allowance, but does she still need to declare the dividend income to HMRC? Thanks again.

Not if it's below £10K, unless she already self-assesses:

https://www.gov.uk/tax-on-dividends

lindabea

eskbanker said:

Stegor said:

Hi, thanks for the reply. I understand the dividend allowance doesn't come into play until she has used up her personal allowance, but does she still need to declare the dividend income to HMRC? Thanks again.

Not if it's below £10K, unless she already self-assesses:

https://www.gov.uk/tax-on-dividends

Hello eskbanker -I think you mean to say below £1K.  The gov link you gave says that you need to inform HMRC if your dividend is upto £10K and above that you fall into self assessment.  But the way I understand it is that if your dividend is within the div allowance, you don't need to inform them as no tax is due.   

ColdIron

lindabea said:

eskbanker said:

Stegor said:

Hi, thanks for the reply. I understand the dividend allowance doesn't come into play until she has used up her personal allowance, but does she still need to declare the dividend income to HMRC? Thanks again.

Not if it's below £10K, unless she already self-assesses:

https://www.gov.uk/tax-on-dividends

But the way I understand it is that if your dividend is within the div allowance, you don't need to inform them as no tax is due.   

True but the OP receives £2,500 pa so not within the 'allowance' hence the query

eskbanker

lindabea said:

eskbanker said:

Stegor said:

Hi, thanks for the reply. I understand the dividend allowance doesn't come into play until she has used up her personal allowance, but does she still need to declare the dividend income to HMRC? Thanks again.

Not if it's below £10K, unless she already self-assesses:

https://www.gov.uk/tax-on-dividends

Hello eskbanker -I think you mean to say below £1K.  The gov link you gave says that you need to inform HMRC if your dividend is upto £10K and above that you fall into self assessment.  But the way I understand it is that if your dividend is within the div allowance, you don't need to inform them as no tax is due.   

My answer was specifically in the context of OP's wife earning less than her personal allowance in total....

lindabea

ColdIron said:

lindabea said:

eskbanker said:

Stegor said:

Hi, thanks for the reply. I understand the dividend allowance doesn't come into play until she has used up her personal allowance, but does she still need to declare the dividend income to HMRC? Thanks again.

Not if it's below £10K, unless she already self-assesses:

https://www.gov.uk/tax-on-dividends

But the way I understand it is that if your dividend is within the div allowance, you don't need to inform them as no tax is due.   

True but the OP receives £2,500 pa so not within the 'allowance' hence the query

Exactly the point I'm making.  The OP's wife receives £2.5K in dividends ie below £10K so she will need to inform HMRC, yet eskbanker is saying she dos not need to inform HMRC because it is below £10K.  

I'm not trying to labour this point; I just need to fully understand the correct requirement as I'm also in a position this year where my div if £2500, so do I need to inform HMRC  The way I interpret eskbanker's reply is that I don't need to but this is contrary to the link.  

lindabea

eskbanker said:

lindabea said:

eskbanker said:

Stegor said:

Hi, thanks for the reply. I understand the dividend allowance doesn't come into play until she has used up her personal allowance, but does she still need to declare the dividend income to HMRC? Thanks again.

Not if it's below £10K, unless she already self-assesses:

https://www.gov.uk/tax-on-dividends

Hello eskbanker -I think you mean to say below £1K.  The gov link you gave says that you need to inform HMRC if your dividend is upto £10K and above that you fall into self assessment.  But the way I understand it is that if your dividend is within the div allowance, you don't need to inform them as no tax is due.   

My answer was specifically in the context of OP's wife earning less than her personal allowance in total....

That may well be the case, but why qualify it with 'if it's below £10K.  That's what I'm finding confusing

jimjames

lindabea said:

ColdIron said:

lindabea said:

eskbanker said:

Stegor said:

Hi, thanks for the reply. I understand the dividend allowance doesn't come into play until she has used up her personal allowance, but does she still need to declare the dividend income to HMRC? Thanks again.

Not if it's below £10K, unless she already self-assesses:

https://www.gov.uk/tax-on-dividends

But the way I understand it is that if your dividend is within the div allowance, you don't need to inform them as no tax is due.   

True but the OP receives £2,500 pa so not within the 'allowance' hence the query

Exactly the point I'm making.  The OP's wife receives £2.5K in dividends ie below £10K so she will need to inform HMRC, yet eskbanker is saying she dos not need to inform HMRC because it is below £10K.  

I'm not trying to labour this point; I just need to fully understand the correct requirement as I'm also in a position this year where my div if £2500, so do I need to inform HMRC  The way I interpret eskbanker's reply is that I don't need to but this is contrary to the link.  

You don't need to inform HMRC if your income including div is £11500 as per the OP AND the dividend is under £10k. If you are below the income tax threshold there would be no need to inform HMRC as no tax due.

Link says: You do not pay tax on any dividend income that falls within your Personal Allowance (the amount of income you can earn each year without paying tax).

I can see the link might be confusing if your only income was £11500 of dividends which is both below the personal allowance so no tax due and also above £10k reporting limit. I suspect no need to report but would be worth clarifying.