Future UK share dividends and tax code

brewerdave

Finally got my OH's tax sorted out recently. They owed overpaid tax for 23/4 & 24/5 on overestimated bank interest whilst my wife owed them a small amount due to the reduced share dividend allowance in 24/5.
They have altered her tax code for the rest of 25/6 and included an estimate of the amount of interest to be earned as untaxed.(ie less than £1000)
However they haven't included an estimated figure for share dividends that will give rise to a tax liability - is this "normal"?
Previous tax years this has obviously not been an issue until the Chancellor reduced the allowance.. 

FrugaiMacDugal

From Gov.UK,

If you do not send a Self Assessment tax return, you must let HMRC know after the end of the tax year (5 April) and before 5 October. You can do this by either: asking HMRC to update your tax code - the tax will be taken from your wages or pensioncontacting the helpline  You do not need to tell HMRC if your dividends are within the dividend allowance for the tax year.

Dazed_and_C0nfused

brewerdave said:

Finally got my OH's tax sorted out recently. They owed overpaid tax for 23/4 & 24/5 on overestimated bank interest whilst my wife owed them a small amount due to the reduced share dividend allowance in 24/5.
They have altered her tax code for the rest of 25/6 and included an estimate of the amount of interest to be earned as untaxed.(ie less than £1000)
However they haven't included an estimated figure for share dividends that will give rise to a tax liability - is this "normal"?
Previous tax years this has obviously not been an issue until the Chancellor reduced the allowance.. 

For some reason HMRC seem to have applied different rules for interest and dividend income.

Interest that uses up spare tax code allowances can be included in a tax code but the same thing doesn't happen where dividend income would use the spare tax code allowances.

But if her dividend income would be expected to generate a tax liability then I would think a tax code entry would be needed.

As ever with tax though the devil is in the detail.

Have you told HMRC the expected dividend income for 2025/26?  Will this incur any tax liability?

molerat

They reduced MrsM's code with (incorrect) forecast dividends this year but changing it on line corrected the coding.  You need to have your own pretty accurate guesses on interest and dividends, I keep a spreadsheet with a stab at figures at the start of the year and update as actuals are received.

brewerdave

Dazed_and_C0nfused said:

But if her dividend income would be expected to generate a tax liability then I would think a tax code entry would be needed.

As ever with tax though the devil is in the detail.

Have you told HMRC the expected dividend income for 2025/26?  Will this incur any tax liability?

No - we assumed that they would include it in the revised tax code for 25/6 as they have for expected bank untaxed interest. - based on the figures we gave them for 24/5. And yes , the dividends will most probably exceed the £500 tax free allowance. It really is crazy how long it's taken to sort things out thus far.
Oh well ! back to the online system to put a figure in for this tax year I suppose - and presumably another new tax code!!