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Posted Thu, 09 Nov 2023 10:10:07 GMT by
Hello, I am getting confused on the £2,000 dividend allowance. My dividend income is below this figure, yet when totalling my income for the year, this dividend income pushes my total income above £100,000 thus adding an additional tax charge. I expect to pay the following on employment income: 20% on £37,700; 40% thereafter. I understand the reduction in my £12,570 personal allowance herein. However, why is the sub-£2,000 dividend added to this figure when it should be covered by the dividend allowance? It makes dividend income Triple Taxed - at the company level, the withholding tax and now on the personal level (even if it is within the dividend allowance). Can you please advise? Thanks for your help in advance.
Posted Wed, 15 Nov 2023 12:25:34 GMT by HMRC Admin 25
Hi Customer9999,
This is still taxable income and is added to show your total income received.
If this then takes you over 3100k, your allowances will be correctly reduced.
As the actual amount is still within the dividend allowance for being taxed, then the tax rate applied will be 0%
Thank you. 

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