2016/2017 SA: same tax rate applied for div and non-div income

[Mark79]

I’ve just done my 2016/2017 online self-assessment and I’m really confused by the calculation it did.
Would be great if someone could confirm if I’m fundamentally wrong here and why.

Issue is that my dividend income above allowance was subjected to regular tax rate and NOT dividend tax rate.

My situation (in simple terms) in 2016/2017:
• Non-dividend income (from perm job which I quit mid year): £39k
• Dividend income (from my LTD): £8k

I though my tax would be: 20%*(£39k - £11k) + 32.5%*(£8k-£5k)

But the HMRC online SA tool calculated differently:
Pay from employments: £39k
Dividends from UK companies: £8k
Total income received: £47k
minus Personal Allowance £11k
Total income on which tax is due £36k

How we have worked out your income tax
Basic rate £31k x 20% = £6,2k
Starting rate £0 x 0% £0
Nil rate £0 x 0% £0
Dividends from companies etc: Nil rate £5k x 0% £0
Total income on which tax has been charged £36k

Looks like HMRC applied 20% across the board on both div and non-div. Don't really want to question the logic in the online tool, but I just fail to explain it to myself. Thanks a lot.

[philip@wellwoodhoyle]

£3k of the personal allowance and the £5k zero rate dividend band cover the £8k dividend.
Of the £39k employment income, the remaining £8k of personal allowance is offset leaving £31k taxable at 20% being £6,200.

Remember that you can allocate the personal allowance in any way you want - it doesn't have to go against employment income first.

[MrButton]

Did you not pay paye in your perm role though? I.e do you actually have to pay anything?

[northernladuk]

and is there anything else you don't know about you might have gotten wrong?

[WTFH]

Dividends from companies etc: Nil rate £5k x 0% £0.

I'm not an accountant, but this seems wrong.

Why are you filling in your SA and not getting your accountant to do it?

[pr1]

I'm not an accountant, but this seems wrong.

Why are you filling in your SA and not getting your accountant to do it?

5k dividend allowance

he's using the HMRC tool to input two numbers - his salary and his dividends, does it really need an accountant?

[WTFH]

5k dividend allowance

he's using the HMRC tool to input two numbers - his salary and his dividends, does it really need an accountant?

If it's not giving the right numbers, then yes.

[pr1]

If it's not giving the right numbers, then yes.

I thought post #2 confirmed they are the right numbers?

[TheCyclingProgrammer]

I'm not an accountant, but this seems wrong.

Why are you filling in your SA and not getting your accountant to do it?

What part do you think is wrong? The first £5k of dividends above the personal allowance is always taxed at 0%.

[WTFH]

What part do you think is wrong? The first £5k of dividends above the personal allowance is always taxed at 0%.

Sorry, my bad - I misread it!