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Posted Tue, 14 Nov 2023 13:03:11 GMT by
I am trying to submit a Self Assessment return using the HMRC portal. I have employment income, self employed income and dividends (three separate businesses). My total income is just over the higher rate threshold so my understanding is that, as dividends are taxed as the top slice of income, part of my dividends should be taxed a the lower rate and the amount by which my income exceeds the higher rate threshold should be taxed at the higher rate. However on the calculation produced by the HMRC software, the higher rate of 33.75% is correctly applied to the higher rate dividends but the dividends that fall into the lower rate band are being taxed at 20% along with the rest of my income. Is this an error with the software? Or am I entering something incorrectly?
Posted Fri, 17 Nov 2023 15:52:21 GMT by HMRC Admin 20
Hi PenT,
It should not be taxing the dividends at 20%. anthing over the allowance of £2000 should be done at 33.75. Please recheck your entries and also view the calculation to confirm the correct rate applied.
Thank you.
Posted Fri, 24 Nov 2023 20:52:31 GMT by
My problem is similar to PenT. I have checked my entries. They are correct. My dividends at lower rate have been taxed at 20% instead of 8.75%. The dividends at higher rate have been taxed correctly at 33.75%. Can I get the site software to apply the correct rate? Should I submit the return anyway and then apply for a correction? Will someone in HMRC correct the software?
Posted Tue, 28 Nov 2023 09:19:28 GMT by HMRC Admin 21
Hi John
The drop down is for the rate applied in the country the dividends arose as this is the maximum you can claim should your dividends be taxed at a higher rate in the UK. if only liable at 8.75% then this will be applied in the calculation.
Thank you.
Posted Thu, 21 Dec 2023 11:52:38 GMT by
The HMRC reply does not make sense to me. See figures below. Should I query this formally with HMRC? How can I do this? Headroom below higher rate band in my total income excluding dividends : £2,465 Dividends from UK companies: £5,609. Dividends taxed at nil rate: £2,000. Dividends taxed at 20% basic rate: £2,465. Error? Dividends taxed at 8.75% basic dividend rate: £0. Error? Should be £2,465 Dividends taxed at 33.75% Higher dividend rate: £1,144
Posted Wed, 27 Dec 2023 10:34:50 GMT by
I also have this problem. If I change the dividend numbers then the dividend tax banding (0, 8.75%, 33.75%) is correctly shown, but in my exact dividend number the software just lump them all into 20% basic rate.
Posted Tue, 02 Jan 2024 14:42:13 GMT by HMRC Admin 2
Hi JohnJBGuis,

Yes, this doesnt look right as they should not be taxed at 20%.

Please contact our Self Assessment team so we can investigate.

Self Assessment: general enquiries

Thank you.
Posted Sun, 07 Jan 2024 15:25:50 GMT by
I have just had the same issue. Basic rate divdends are being lumped in with 20% earnings instead of being taxed at 8.75%. (I do not have any higher rate dividends). Have HMRC confirmed this is an actual glitch?
Posted Wed, 10 Jan 2024 15:05:30 GMT by HMRC Admin 10
Try deleting the section and re entering the details as we are not aware of any issues.
If you still have an error, click on get help with this page to report it.

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