Working out my Tax due

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Alice_Carden
Alice_Carden Posts: 26 Forumite
in Cutting tax
What would my tax payable be on £11,850 personal allowance?

Salary £11,800
Savings Interest £4,930 (outside ISA)
Share dividends £1,940 (outside ISA)

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  • chrisbur
    chrisbur Posts: 4,053 Forumite
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    Alice_Carden wrote: »
    What would my tax payable be on £11,850 personal allowance?

    Salary £11,800
    Savings Interest £4,930 (outside ISA)
    Share dividends £1,940 (outside ISA)

    Looks like none to me.
    Salary is under your personal allowance, interest under your starting rate for savings interest and dividends under your tax-free dividend allowance.
    https://www.gov.uk/apply-tax-free-interest-on-savings
    https://www.which.co.uk/money/tax/income-tax/income-tax-on-savings-and-investments/dividend-tax-ax8p28u7hyqt
  • Alice_Carden
    Alice_Carden Posts: 26 Forumite
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    Would that change if my employer contributes £1,200 to my pension or are contributions excluded for income?
  • 00ec25
    00ec25 Posts: 9,123 Forumite
    Combo Breaker First Post
    edited 15 September 2018 at 9:42AM
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    no tax to pay

    salary 11,800 - 11,850 personal allowance = zero taxable income = £0 tax to pay

    starting rate for savings: salary 11,800 + other income (£0) = 11,800. This is less than your personal allowance therefore the whole of your stating rate for savings (£5,000) remains intact + you have not touched your £1,000 interest free allowance
    so:
    interest rec'd 4,930 - 5,000 - 1,000 = £0 = zero taxable interest

    dividends rec'd £1,940 - dividends 0% band £2,000 = £0 = zero taxable dividends

    At 18/19 tax rates, the tax thresholds are intended to help ("favour"?) low income people who have "high" unearned income, eg: pensioners. So, you can potentially receive £19,850 before you would pay any tax at all:

    salary or pension no more than £11,850
    savings interest no more than £6,000
    dividends no more than £2,000
    Total tax free income £19,850
  • 00ec25
    00ec25 Posts: 9,123 Forumite
    Combo Breaker First Post
    edited 15 September 2018 at 9:41AM
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    Alice_Carden wrote: »
    Would that change if my employer contributes £1,200 to my pension or are contributions excluded for income?
    contributions by an employer to your pension pot are not classed as your earnings
  • Alice_Carden
    Alice_Carden Posts: 26 Forumite
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    That's great to know and very helpful.

    So now I know its not £1k or £5k savings tax free but I could qualify for £6k :)
  • 00ec25
    00ec25 Posts: 9,123 Forumite
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    Alice_Carden wrote: »
    So now I know its not £1k or £5k savings tax free but I could qualify for £6k :)
    yes, provided your income is less than the personal allowance so you do not lose any of the starting rate . If your income is more than the personal allowance you lose it £1 for £1

    you should post on the savings and investment board to offer advice on where to get such high interest rates .... ?
  • uknick
    uknick Posts: 1,625 Forumite
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    00ec25 wrote: »

    you should post on the savings and investment board to offer advice on where to get such high interest rates .... ?

    Maybe she has oodles of capital invested. Cleared £500k from house sale, not hard to get £5k in interest each year.
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