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  • FIRST POST
    • talexuser
    • By talexuser 13th Mar 18, 11:59 AM
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    talexuser
    Notice of coding re dividend income.
    • #1
    • 13th Mar 18, 11:59 AM
    Notice of coding re dividend income. 13th Mar 18 at 11:59 AM
    The last two years I have arranged my unbundled trusts to have a dividend income of just below 5k.

    Just got a coding for 18/19 with an estimate of dividend tax of 665.

    If you stayed below the upper rate of tax, a 7.5% rate of dividend tax would require dividends of 11k minus the new 2K allowance band to get to around 665 of tax?

    I can't see how they got this figure since total pension/savings/dividends income should be just below the higher rate threshold.

    Does HMRC generally pluck figures out of the air to their advantage?
Page 1
    • Linton
    • By Linton 13th Mar 18, 12:04 PM
    • 9,378 Posts
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    Linton
    • #2
    • 13th Mar 18, 12:04 PM
    • #2
    • 13th Mar 18, 12:04 PM
    They normally appear to assume that income rises with inflation. If you dont like the allocation of your tax allowance/ estimate of income you can change it via the online tax account.
    • Dazed and confused
    • By Dazed and confused 13th Mar 18, 12:26 PM
    • 2,557 Posts
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    Dazed and confused
    • #3
    • 13th Mar 18, 12:26 PM
    • #3
    • 13th Mar 18, 12:26 PM
    Is the 665 actually tax due or a deduction in your tax code to collect extra tax?

    Remember employers/pension payers can only deduct tax at the standard tax rates so a restriction in your tax code of 665 may only result in extra tax of 133 (665 x 20%).

    Without the full breakdown of your code it is difficult to be certain what is happening.
    • dales1
    • By dales1 13th Mar 18, 3:13 PM
    • 45 Posts
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    dales1
    • #4
    • 13th Mar 18, 3:13 PM
    • #4
    • 13th Mar 18, 3:13 PM
    For my 2018-19 tax code, the Revenue have used the exact same figures for interest and dividends, as the estimates for 2017-18 which I gave them.

    The deduction in my 2018-19 tax code for dividends equals (Estimated Dividends less 2,000) x 7.5% and then divided by 20%.
    • talexuser
    • By talexuser 13th Mar 18, 5:59 PM
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    talexuser
    • #5
    • 13th Mar 18, 5:59 PM
    • #5
    • 13th Mar 18, 5:59 PM
    Is the 665 actually tax due or a deduction in your tax code to collect extra tax?
    Originally posted by Dazed and confused
    Described simply as dividend tax, and subtracted from allowance to give lower tax code.
    • talexuser
    • By talexuser 13th Mar 18, 6:06 PM
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    talexuser
    • #6
    • 13th Mar 18, 6:06 PM
    • #6
    • 13th Mar 18, 6:06 PM
    They normally appear to assume that income rises with inflation. If you dont like the allocation of your tax allowance/ estimate of income you can change it via the online tax account.
    Originally posted by Linton
    Yes, I always update online with my latest estimates for the tax year, just amazed by the large increase assumption.
    • dales1
    • By dales1 13th Mar 18, 7:35 PM
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    dales1
    • #7
    • 13th Mar 18, 7:35 PM
    • #7
    • 13th Mar 18, 7:35 PM
    See my post above (and Dazed's).

    The estimated dividend tax due, must be grossed up by dividing it by 20%, to give the tax code deduction.

    A tax code deduction of 665 means extra tax collected of 133 (per Dazed above) ie 7.5% tax on about 3773 of dividends less 2000 dividend allowance, by my reckoning !
    • talexuser
    • By talexuser 14th Mar 18, 6:24 PM
    • 2,396 Posts
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    talexuser
    • #8
    • 14th Mar 18, 6:24 PM
    • #8
    • 14th Mar 18, 6:24 PM
    Thanks both for explaining that. What a convoluted way of doing it.
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