Originally posted by TheFaQQer
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The effect of making charity donations 'extends' the amount that you can pay in dividends without hitting the higher rate tax, so for the current tax year (2011/12) you would normally start paying 40% tax when your total income exceeds £42,475 (£7,475 + £35,000).
So, say you have made donations of £1,000 - you can take this as extra gross dividend income, so a net dividend of £900.
I hope this assists!
Alan
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