Tax on interest income & dividend

Could you please help to advise the following hypothetical case (all numbers are in GBP): For tax year 2024/2025, my income is solely interest (41,240) and dividend (13,500). Below are my calculation of taxable dividend and interest income: 1) dividend income (13500) (i) less dividend allowance (500) = taxable dividend 13000 (ii) 2) interest income (41,240) less personal allowance (12570) = 28,670 (iii) 3) 28,670 less Starting rate for savings which is reduced as dividend exceed 12570 (5000 - (13500-12570) = 4070) = 24600 (iv) 4) 24600 less Personal Savings Allowance (500) = taxable interest (24100) (v) My questions are (a) am I correct to apply the personal allowance (12570) to my interest income before dividend income? (b) which figures (i)+(iii) or (ii)+(iii) or (i)+(iv) or (ii)+(iv) or (i)+(v) or (ii)+(v) is used to determine the income tax band which in turns affect the amount of Personal Savings Allowance (500 or 1000) available under step (4)? For most of the cases, I fall under higher rate tax band and only get 500 of Personal Savings Allowance but eventually, my taxable interest income will only subject to 20% tax as it's less than 37,700 ie. basic rate. (c) similarly, which figures (i)+(iii) or (ii)+(iii) or (i)+(iv) or (ii)+(iv) or (i)+(v) or (ii)+(v) is used to determine the income tax band which in turns affect the tax rate of dividend income ie. 8.75% or 33.75%

Hi,
Yes the personal allowance will be set against untaxed interest first.
From your figures the dividend income will be taxed £8530 at 8.75% and £4470 at 33.75%.
Thank you.

Thank you very much for your prompt reply. However, a) I don't understand how to derive the amount of dividend income taxed under basic rate (i.e. £8530), could you please advise; b) is that correct in the above example that the starting rate for savings available is 24,600? c) what is the amount of Personal Savings Allowance available 500 or 1000? Which income amount is used to determine the tax band?

I receive dividends from shares I hold with my employer twice a year. This year due to the new allowance I will have to pay tax on some of it. How do I amend this on my tax record? Do I select ‘investment income is missing’, and then is it ‘investment income has ended’ or ‘investment income has not ended’? Thank you

Hi,
 

If the dividends are from a UK employer, they would be declared in box 4 of SA100, page TR3.  If they are from an overseas employer, you use box 6 of SA100, page TR4, provided the sum is below £2000 and no foreign tax was deducted from the dividends.  Foreign dividends would then have to be declared on SA106 or in the foreign section of the online tax return . Thank you .

Hi chiyu,
In order to give you the best advice here, we may need to confirm some elements of your query. To allow us to do this, contact us by webchat or phone via Income Tax: general enquiries.
Thank you.

Thanks for your reply. However, I am very sorry that I don't understand what element of my query is so personal or sensitive that can't be clarified here through the forum. Please feel free to ask for any additional information that may help you to understand my case. Besides, I don't think webchat works for me as it's handled by AI and hence not as flexible as this forum and I prefer asking this kind of tax question by writing. Hope you can understand and spare some time to give me your valuable advice. Many thanks.

Can you please tell me if bank ISA interest received to a deceased’s estate and due after death is required to be included in Inheritance Tax calculations?

Hi chiyu,
On the webchat you will be able to speak to an adviser who will be able to review and ask any additional questions to assist you.
Or if you contact the helpline it will be an adviser that can assist.
You can webchat/phone here:
Contact HMRC
Thank you. 

Hi Julie,
Please refer to:
How Inheritance Tax works: thresholds, rules and allowances
Or contact the Inheritance helpline here:
Inheritance Tax: general enquiries
Thank you.