Telling HMRC about Dividend Income

Aminatidi

Honestly I just don't get why in 2024 with dividends going directly into the platforms this is how it still works.

If you're a normal PAYE employee with some investments on a major platform, which doesn't seem especially unusual, I'm not sure you expect to have to work this stuff out and even if you do it's frustrating that there doesn't seem to be a single set of clear guidance on the HMRCs own website on exactly what to do and when to do it.

I really appreciate the help and clarification but I'm also pretty sure I won't be the only one asking this question with the lower thresholds 👍🏻

boingy

Aminatidi said:

Honestly I just don't get why in 2024 with dividends going directly into the platforms this is how it still works.

If you're a normal PAYE employee with some investments on a major platform, which doesn't seem especially unusual, I'm not sure you expect to have to work this stuff out and even if you do it's frustrating that there doesn't seem to be a single set of clear guidance on the HMRCs own website on exactly what to do and when to do it.

I really appreciate the help and clarification but I'm also pretty sure I won't be the only one asking this question with the lower thresholds 👍🏻

I'm not sure how many people will be holding enough dividend paying stuff outside of ISAs to trigger the tax even with a lower threshold. I am sure that the majority of them will do nothing and wait to see if HMRC prod them for payment or adjust their tax code.

And, yes, many aspects of HMRC are somewhat inefficient. Try taking a one-off payment from your pension and watch them assume that you'll do that every month and tax you accordingly. 

GeoffTF

Aminatidi said:

Honestly I just don't get why in 2024 with dividends going directly into the platforms this is how it still works.

If you're a normal PAYE employee with some investments on a major platform, which doesn't seem especially unusual, I'm not sure you expect to have to work this stuff out and even if you do it's frustrating that there doesn't seem to be a single set of clear guidance on the HMRCs own website on exactly what to do and when to do it.

I really appreciate the help and clarification but I'm also pretty sure I won't be the only one asking this question with the lower thresholds 👍🏻

The tax rules are very complicated. That gives accountants a living. You may have a simple case, or there might be something that you have not told us that makes it more complicated (e.g. a dividend from a foreign domiciled fund).

Aminatidi

Yeah put like that I can see the other side of it.

But being selfish it's still a PITA for what feels like a very simple scenario.

First world problems though I get it 😀

eskbanker

Aminatidi said:

Honestly I just don't get why in 2024 with dividends going directly into the platforms this is how it still works.

If you're a normal PAYE employee with some investments on a major platform, which doesn't seem especially unusual...

Of course it's not unusual but it's not the only scenario - many hold investments outside platforms in certificated form, for example.

jimjames

You might also find it's worth reorganising your investments so that ones that pay the largest dividends are inside an ISA and ones that don't are outside and moved into an ISA later. (apologies if you've already looked at this)

Harrhy

I am in exactly the same position as Aminatidi. I have a Hargreaves Lansdown Fund and Share account as well as a few inherited privatisation shares. My ISAs are all used up! For the 2023-24 tax year I will owe HMRC £33 tax on these share dividends as a basic rate tax payer and presumably around £77 for £2024-25.
HMRC do nothing but complain about the numbers of phone calls they receive and yet do not give us a simple way of submitting this data to them either by post on a form or electronically. 
Am I correct in assuming that until 2016 basic rate tax was deducted from dividend income as a tax credit before it was paid out? (In a similar way that savings interest tax payments at basic rate were deducted by the banks and building societies.)
I realise that the personal savings allowance has made all this much more complicated as well as the tax free allowance on dividends. I just wish I could pay what I owe up front and then get any excess rebated either on request or in the fullness of time. I now have to put money aside for a considerable time to pay the tax bills I know I will receive many months after the end of the tax year to which they refer. 

EthicsGradient

Harrhy said:

I am in exactly the same position as Aminatidi. I have a Hargreaves Lansdown Fund and Share account as well as a few inherited privatisation shares. My ISAs are all used up! For the 2023-24 tax year I will owe HMRC £33 tax on these share dividends as a basic rate tax payer and presumably around £77 for £2024-25.
HMRC do nothing but complain about the numbers of phone calls they receive and yet do not give us a simple way of submitting this data to them either by post on a form or electronically. 
Am I correct in assuming that until 2016 basic rate tax was deducted from dividend income as a tax credit before it was paid out? (In a similar way that savings interest tax payments at basic rate were deducted by the banks and building societies.)
I realise that the personal savings allowance has made all this much more complicated as well as the tax free allowance on dividends. I just wish I could pay what I owe up front and then get any excess rebated either on request or in the fullness of time. I now have to put money aside for a considerable time to pay the tax bills I know I will receive many months after the end of the tax year to which they refer. 

Yes, up to the 2015-16 tax year, dividends were paid with a tax credit that meant a basic rate payer had no more liability, and no need to report dividends. That was replaced with a 0% tax rate on the first £5,000 (equivalent of about £6,500 now), which meant many people still had no need to report; that went down to £2,000 in 2018-19, £1,000 in 2023-24, and £500 this year, no doubt bringing many more people into the paying situation. If they'd used those years setting up a decent reporting system without having to do full self-assessment, it wouldn't be so bad.

Harrhy

I assume that the old system would have got the taxation revenue into the Exchequer faster and for those with large share holdings this would have been a very large sum indeed!

Dazed_and_C0nfused

Harrhy said:

I assume that the old system would have got the taxation revenue into the Exchequer faster and for those with large share holdings this would have been a very large sum indeed!

Yes.  But George thought he knew better!