Dividend Tax / Self Assessment

[Darren at Fox-Bartfield]

Dividends

Dividends and investment income form the top slice of the tax calculation, so take all your income then add the dividends on top.......then any dividends that fall into higher rate would be taxed at 32.5%

[PTP]

I think your wires are slightly crossed.

It isn't the fact you can tax income in whatever order you like, it is that you can offset your personal allowance against whichever income gives you the best financial outcome.

The norm is to offset PA against salary first, but with the new dividend tax it can sometimes be better to set it against higher rate dividends first, rather than basic rate salary.

I think this is probably what your accountants are referring to.

You've hit the nail on the head craigy1874

Yes they've made it a bit clearer now that this is what they are doing. Having the choice between offsetting PA against salary or dividend first is a lesson for me.

[craigy1874]

Im a tax advisor of 18 years and its the first year it has ever been beneficial!

[Jessica@WhiteFieldTax]

Im a tax advisor of 18 years and its the first year it has ever been beneficial!

31 years... Honestly, I think this last year is the most complicated personal tax calculation I've seen. No wonder even SA Online was wrong at first.

[philip@wellwoodhoyle]

31 years... Honestly, I think this last year is the most complicated personal tax calculation I've seen. No wonder even SA Online was wrong at first.

You're in for a treat re top slicing relief then. I went on a Giles Mooney course in December (Tim Good's partner - the guy who realised the personal allowance allocation issue and told HMRC they were wrong!). He's now discovered that top slicing relief claims will also be wrong for similar reasons - apparently there's a bit in the middle of the calculation which everyone forgot about because it never made a difference to the end result, but now it does! The calculations shown at the course by Giles were mind-blowing, as was the potential difference in tax due! So top slicing relief claims calculated by HMRC and their approved software are now probably wrong too! I suspect that there'll be more and more coming out of the closet in time.