Declaring dividends AND capital gains / rates to use

temega463

Hello MSE forum community. Will be most grateful for any wisdom received on this topic. Couldn't find a previous post that addressed, sorry if I missed.

Tax treatment on dividend or capital gains income is clear from HMRC website when considered separately. But not when earned in the same tax year together. Example scenario:

A) Salary / savings interest: £30K

Dividend income: £50K

C) Capital gains income: £50K

With just (A) and (B) to consider, the salary / savings interest income remains in the basic rate income tax band, so the dividend income will be taxed in part at the dividend basic rate and in part at the dividend higher rate.

Similarly with just (A) and (C) to consider, the capital gains income will be taxed in part at the capital gains basic rate and in part at the capital gains higher rate.

But with all 3 to consider together, do the above both hold, or only for dividends and now all the capital gains are taxed at the higher rate respecting that the dividend + salary is now above the basic rate income tax band?

eskbanker

If your salary plus savings interest plus dividends already takes you into higher rate income tax then all CGT will be charged at the higher rate.

Bookworm105

CGT threshold is based on total "income", so a + b + c compared to threshold £50,270 (23/24 higher rate tax band incl tax free personal allowance)

temega463

Thank you eskbanker & Bookworm105. Clear and helpful.