Tax on Savings and Dividends

HUMBUG

Just out of curiosity, say I have a company pension £6000 pa ,  taxable savings Interest £6000, £7570 share dividends for year 23/24 . 

Can I assume that I can use my 5k 'Starting Rate ' and 1k 'Personal Savings Allowance' to offset against my £6000 savings interest , therefore no tax to pay (ie. at basic rate) on my savings interest? 

Can I then assume that I have £12570- 6000 = £6570 left from my 'Standard Personal Allowance'  which I can offset against my dividends leaving me £7570-6570 = £1000  taxable dividends .  But because I also have a 'Dividend Allowance' of £1k  , this would mean I wouldn't have to pay any dividend tax?

Dazed_and_C0nfused

HUMBUG said:

Just out of curiosity, say I have a company pension £6000 pa ,  taxable savings Interest £6000, £7570 share dividends for year 23/24 . 

Can I assume that I can use my 5k 'Starting Rate ' and 1k 'Personal Savings Allowance' to offset against my £6000 savings interest , therefore no tax to pay (ie. at basic rate) on my savings interest? 

Can I then assume that I have £12570- 6000 = £6570 left from my 'Standard Personal Allowance'  which I can offset against my dividends leaving me £7570-6570 = £1000  taxable dividends .  But because I also have a 'Dividend Allowance' of £1k  , this would mean I wouldn't have to pay any dividend tax?

You can allocate the Personal Allowance, which is the only "allowance" you have, in whichever way gives you the most beneficial outcome.

And you have to use the Personal Allowance first.

So using your figures you might opt to use your Personal Allowance against your £6,000 pension income and £6,570 of your dividends.

That will leave £6,000 interest and £1,000 dividend income, all of which will be taxed.

£5,000 x 0% = £0.00 (savings starter rate band
£1,000 x 0% = £0.00 (savings nil rate band)
£500 x 0% = £0.00 (dividend nil rate)
£500 x 8.75% = £43.75 (dividend basic rate)

Total tax payable = £43.75

The above assumes you haven't made any Gift Aid donations greater than £219 (gross)

HUMBUG

Dazed_and_C0nfused said:

HUMBUG said:

Just out of curiosity, say I have a company pension £6000 pa ,  taxable savings Interest £6000, £7570 share dividends for year 23/24 . 

Can I assume that I can use my 5k 'Starting Rate ' and 1k 'Personal Savings Allowance' to offset against my £6000 savings interest , therefore no tax to pay (ie. at basic rate) on my savings interest? 

Can I then assume that I have £12570- 6000 = £6570 left from my 'Standard Personal Allowance'  which I can offset against my dividends leaving me £7570-6570 = £1000  taxable dividends .  But because I also have a 'Dividend Allowance' of £1k  , this would mean I wouldn't have to pay any dividend tax?

You can allocate the Personal Allowance, which is the only "allowance" you have, in whichever way gives you the most beneficial outcome.

And you have to use the Personal Allowance first.

So using your figures you might opt to use your Personal Allowance against your £6,000 pension income and £6,570 of your dividends.

That will leave £6,000 interest and £1,000 dividend income, all of which will be taxed.

£5,000 x 0% = £0.00 (savings starter rate band
£1,000 x 0% = £0.00 (savings nil rate band)
£500 x 0% = £0.00 (dividend nil rate)
£500 x 8.75% = £43.75 (dividend basic rate)

Total tax payable = £43.75

The above assumes you haven't made any Gift Aid donations greater than £219 (gross)

Many thanks as I never knew this at all !!! 

I thought the Personal Allowance could only be used against 'wages' first and then any 'unused' amount to offset tax on savings interest and dividends. So theoretically , I could use the £12570 personal allowance to offset tax on savings interest and dividends first , if I found it the most beneficial outcome.

PS. I 'm assuming you used my example for year 24/25  because the 23/24 year had a dividend allowance of 1k , while 24/25 will be 0.5k.

Dazed_and_C0nfused

HUMBUG said:

Dazed_and_C0nfused said:

HUMBUG said:

Just out of curiosity, say I have a company pension £6000 pa ,  taxable savings Interest £6000, £7570 share dividends for year 23/24 . 

Can I assume that I can use my 5k 'Starting Rate ' and 1k 'Personal Savings Allowance' to offset against my £6000 savings interest , therefore no tax to pay (ie. at basic rate) on my savings interest? 

Can I then assume that I have £12570- 6000 = £6570 left from my 'Standard Personal Allowance'  which I can offset against my dividends leaving me £7570-6570 = £1000  taxable dividends .  But because I also have a 'Dividend Allowance' of £1k  , this would mean I wouldn't have to pay any dividend tax?

You can allocate the Personal Allowance, which is the only "allowance" you have, in whichever way gives you the most beneficial outcome.

And you have to use the Personal Allowance first.

So using your figures you might opt to use your Personal Allowance against your £6,000 pension income and £6,570 of your dividends.

That will leave £6,000 interest and £1,000 dividend income, all of which will be taxed.

£5,000 x 0% = £0.00 (savings starter rate band
£1,000 x 0% = £0.00 (savings nil rate band)
£500 x 0% = £0.00 (dividend nil rate)
£500 x 8.75% = £43.75 (dividend basic rate)

Total tax payable = £43.75

The above assumes you haven't made any Gift Aid donations greater than £219 (gross)

Many thanks as I never knew this at all !!! 

I thought the Personal Allowance could only be used against 'wages' first and then any 'unused' amount to offset tax on savings interest and dividends. So theoretically , I could use the £12570 personal allowance to offset tax on savings interest and dividends first , if I found it the most beneficial outcome.

Yes, but given there aren't any 0% tax bands for anything other than savings interest and dividends that's not likely to happen.

And don't forget any non savings non dividend income which uses up some basic rate band will also reduce the savings starter rate band available to be used.