Scottish Bands/Allowances - is this correct?

PensionsQuery

If a Scottish taxpayer has: 

Gross Salary of £43k
Savings Interest of £1.2k
Dividends of £600
Capital Gains of £25k (realised in Jan 25)


Then is it correct that

1) They still have the full £1k Personal Savings Allowance so £200 of savings interest is taxed at 20%

2) The dividend nil rate band is £500 so £100 of dividends is taxed at 8.75%

3) As a basic rate taxpayer, the capital gain (minus the £3k allowance) is taxed at 18%


Or does the capital gain "tip the scales" so that they're now a higher rate taxpayer and thus the PSA is reduced to £500 and the capital gain is taxed at 24%?

Dazed_and_C0nfused

PensionsQuery said:

If a Scottish taxpayer has: 

Gross Salary of £43k
Savings Interest of £1.2k
Dividends of £600
Capital Gains of £25k (realised in Jan 25)

Then is it correct that

1) They still have the full £1k Personal Savings Allowance so £200 of savings interest is taxed at 20%

2) The dividend nil rate band is £500 so £100 of dividends is taxed at 8.75%

3) As a basic rate taxpayer, the capital gain (minus the £3k allowance) is taxed at 18%


Or does the capital gain "tip the scales" so that they're now a higher rate taxpayer and thus the PSA is reduced to £500 and the capital gain is taxed at 24%?

CGT won't impact income tax.

But all the income above PA is taxed so there might be less basic rate band available for the CGT calculation.

In your example I would say the first £1,000 of interest is taxed at 0%.  As is the first £500 of dividends.

eskbanker

CGT won't impact income tax, but the aggregate income plus CGT determines the rate of CGT payable, so most of the capital gain will be chargeable at the higher rate:

https://www.gov.uk/capital-gains-tax/rates

PensionsQuery

Thank you both

So am I best to think of it as blocks e.g. the total "Income" is £69,800 broken down as below?

Salary 0%	12570
Salary 20% (1)	30430
Savings 0%	1000
Savings 20%	200
Dividends 0%	500
Dividends 8.75%	100
Cap Gain 0% (2)	3000
Cao Gain 18% (2)	2470
Cap Gain 24% (3)	19530

(1) I'm using an example rate of 20% here - I appreciate the true Scottish rates will be a mix of 19%/20%/21%.

(2) I get confused which 'exemptions' are "allowances" and which are "taxed at zero". For CGT is the £3k a true "allowance" (i.e. the "taxable gain" is actually only £22k?) or is the taxable gain still £25k, but with £3k "taxed at zero" and eating up some basic rate band?

(3) I'm confused on the interaction between "capital gains not affecting income tax" yet the rate of CGT payable depends on whether you're a basic rate or higher rate taxpayer.  Am I on the right track here allocating part of the gain to any remaining "basic / 18% rate band" and part to the "higher / 24% rate band"?

Apologies for the basic questions - every time I think I've learned something I seem to forget something else! 

Dazed_and_C0nfused

PensionsQuery said:

Thank you both

So am I best to think of it as blocks e.g. the total "Income" is £69,800 broken down as below?

Salary 0%	12570
Salary 20% (1)	30430
Savings 0%	1000
Savings 20%	200
Dividends 0%	500
Dividends 8.75%	100
Cap Gain 0% (2)	3000
Cao Gain 18% (2)	2470
Cap Gain 24% (3)	19530

(1) I'm using an example rate of 20% here - I appreciate the true Scottish rates will be a mix of 19%/20%/21%.

(2) I get confused which 'exemptions' are "allowances" and which are "taxed at zero". For CGT is the £3k a true "allowance" (i.e. the "taxable gain" is actually only £22k?) or is the taxable gain still £25k, but with £3k "taxed at zero" and eating up some basic rate band?

(3) I'm confused on the interaction between "capital gains not affecting income tax" yet the rate of CGT payable depends on whether you're a basic rate or higher rate taxpayer.  Am I on the right track here allocating part of the gain to any remaining "basic / 18% rate band" and part to the "higher / 24% rate band"?

Apologies for the basic questions - every time I think I've learned something I seem to forget something else! 

Probably the easiest way to think of it is you work out the income tax first. Making note of how much of the basic rate band has been used.

The four common "allowances" are the Personal Allowance, Blind Person's Allowance, Trading Allowance and Property Allowance.

Other so called "allowances" are either 0% rate bands (PsA, dividend nil rate) or tax reducers (Marriage Allowance for the recipient and Married Couple's Allowance).

That is end of the story for income tax.  What happens with your CGT will never change that.

Then you work out the CGT payable.  The key thing you need to know from the income tax part is how much basic rate band had been used.  In your example that is £32,230.

PensionsQuery

Thanks again.

To work out the CGT payable then, is it

1) £25k less £3k = £22k taxable gain, of which £5470 is taxed @ 18% and £16530 @ 24%

Or

2) £25k taxable gain, of which £3k is taxed @ 0%, £2470 @ 18% and £19530 @ 24%?

Or
 
3) time to call an accountant 🤣