Personal Allowance Vs Dividends Allowance clarification needed

I am filling in my Tax Return for the first time for the 2022/23 Tax year. Should be simple enough since I currently live abroad and have only two issues to report on; rental income from my flat in the UK and interests/dividends from savings in UK banks. Nothing else to include in the Tax Return. I understand my Personal Allowance is GBP 12,570 and my dividends allowance is GBP 2000. what I need to know is whether the net income from property alone (after deducting insurance, repairs costs and management fees etc...) will be taxed if I have earned over 12,570 GBP or will I need to add the total dividends/interests from my savings even if they are less than 2000 GBP? In other words, are the Personal Allowance and Dividends Allowance separate ie I get taxed after 12570 GBP from property income and taxed after earning over 2000 GBP from savings?

Hi,
If your net income from property and your dividends are below £14570.00, then no tax is payable.  
If tax has been deducted from your dividends, this is not refundable, unles you have paid more tax than you are liable for.  In that case the difference would be refunded.  
You will need to look at the guidance on 'disregared income' at SAIM1170
SAIM1170
Thank you.

Thanks. But to make sure it is all clear. I have no dividends just interest from savings accounts and bonds. I read that these are called Personal Savings. It is my understanding that these are different from dividends and therefore what is my Personal Savings Allowance for 2022/23 tax year? So, if for example, I earned 1,300 GBP in interests from savings accounts and bonds, do I add this sum to what the net income I earned from property rental? Property income - 12,200 GBP Banks Savings (interests) - 1,300 GBP Total - 13,500 GBP Will I be taxed on the difference (13,500 minus 12,570) ie 930 GBP? Thanks again.

Hi,

That is correct, you can see information here:

Income Tax rates and Personal Allowances

Thank you.

I am afraid this is getting a little confusing for me. I was first advised this: "If your net income from property and your dividends are below £14570.00, then no tax is payable." When I wrote again specifying that I don't have dividends but personal savings (interests from savings accounts), I was then advised that, if my total income from property and savings is above 12,570, i would pay tax on anything above my Personal Allowance. Looking at the link sent to me did not help and so can someone please explain why the different and to my mind conflicting advice? Thanks

The interest would actually come under the starting rate for savings, as your other income is below £17570. Therefore you can earn up to £5,000 in savings interest before tax would become due. https://www.gov.uk/apply-tax-free-interest-on-savings Based on your figures above, no tax would be owing.

Hi,
Please refer to:
Tax on savings interest
Thank you.

Whilst I appreciate this forum and Admin's willingness to advise, I am very perplexed given, once again, the conflicting pieces of advice I have received so far. I posted three messages with same info, asking for a simple and straightforward answer and I got three different answers from different people. Now I have read and re-read the thread and cannot tell what the issue is. I made it clear that this is the first time I fill in a Self-Assessment form and provided what I think is the most basic straightforward details of my income. What I got back are three very confusing and contradictory replies. So whose advice am I supposed to follow? I am asking for the last time that someone in the know answer my query and explain what the problem is with the previous replies I got so far.

Property income - 12,200 GBP - covered by personal allowance of £12,570 no tax owing Banks Savings (interests) - 1,300 GBP - covered by starting rate for savings tax as your total taxable income is below £17,570. The first £5,000 of bank interest is taxed at 0% The tax office website is never written simply! If you put your figures into your tax return and look at the calculation before submitting, there shouldn't be any tax owing.

Thanks Amy. Why others Admin 8 and 19 gave different replies is still puzzling. Care to clarify why/ FYI, I cannot see the calculations when I fill out the form because I live abroad and was advised by HMRC before that I need to do paper filing. Regards

Hi,

You are referring to 3 different sources of income and allowances.

Earned income by way of a pension, PAYE, self employment and rental income will always use your personal allowances first. If your income exceeds your personal allowance, you are taxed at 20% and then 40% if a higher rate tax payer.

Interest has a savings allowance of £1000. If the interest is above this, any unused personal allowances will be utilised and if none are available it will be taxed at 20% if you are above the lower rate.

Finally dividends work in the same scenario but it is last to get any unused personal allowance and will be taxed as per the previous link given.

Thank you.

Admin 19 - I have no idea what you are referring to! I never mentioned earned income by way of a pension. I am afraid your reply makes matters even more confusing. Can someone go through this thread and get back to me with a final and definitive answer? A far as I can see the answer below from Amy King is the clearest I have received so far BUT IT CONTRADICTS EARLIER REPLIES! and I never got a reply as to why you're contradicting yourselves. I cannot afford the risk of submitting the wrong info in my Tax return Property income - 12,200 GBP - covered by personal allowance of £12,570 no tax owing Banks Savings (interests) - 1,300 GBP - covered by starting rate for savings tax as your total taxable income is below £17,570. The first £5,000 of bank interest is taxed at 0%

Hi Brian K,

Personal allowances are allocated in order -    
                                                                                                                                                                                                                                                                                           
Non-savings income – comprised of earnings, pensions, taxable social security payments, trading profits and income from property. The highest type gets the first allocation.
Savings income
Dividend income is the top slice.

Thank you.

HMRC Admin 20 - I haven't got a clue what you're talking about! Why don't you simply and clearly answer my last message as this is now getting absurd, to say the least.

Hi Brian K,

The income tax act 2007, dictates the order in which income is taxed.  
Non savings income is taxed first.  
This comprises of earnings, pensions, taxable social security payments, trading profits and income from property.
Next would be bank/building society interest and then dividend income.
Once income tax is calculated, other non income taxes, such as capital gains tax can them be calculated.

Thank you.

Ok Admin 20; so you clarified the order but the question I asked again and again in this thread remains unanswered. I don't know how else to get someone to answer it. It is very very simple and very very straightforward so here it goes again!!!!!!! "Can someone go through this thread and get back to me with a final and definitive answer? A far as I can see the answer below from Amy King is the clearest I have received so far BUT IT CONTRADICTS EARLIER REPLIES! and I never got a reply as to why you're contradicting yourselves. I cannot afford the risk of submitting the wrong info in my Tax return Property income - 12,200 GBP - covered by personal allowance of £12,570 no tax owing Banks Savings (interests) - 1,300 GBP - covered by starting rate for savings tax as your total taxable income is below £17,570. The first £5,000 of bank interest is taxed at 0%"

Hi,

The Personal Allowance is used first and then the Starting Rate would be used. Once the Personal Allowance is fully used the income would then be covered by the Starting rate and then the Personal Savings Allowance.

There is an example here Tax on savings interest

Thank you.

this is not helpful! what will it take to get someone to answer the question I have asked for weeks and that keeps getting lost in information and details that are simply not easy for comprehend. you have to understand that the reason i approached this forum is because i expect HMRC to make this process accessible and it's certainly not the case here. i am asking once more the following: (do red carefully and stop giving me info and details I don't need!) "Can someone go through this thread and get back to me with a final and definitive answer? A far as I can see the answer below from Amy King is the clearest I have received so far BUT IT CONTRADICTS EARLIER REPLIES! and I never got a reply as to why you're contradicting yourselves. I cannot afford the risk of submitting the wrong info in my Tax return Property income - 12,200 GBP - covered by personal allowance of £12,570 no tax owing Banks Savings (interests) - 1,300 GBP - covered by starting rate for savings tax as your total taxable income is below £17,570. The first £5,000 of bank interest is taxed at 0%"

Hi Brian K

We do not comment on scenarios.  As you live abroad, your interest is treated as 'disregarded income' in the tax calculations.  
Guidance on disregarded income can be found here HS300 Non-residents and investment income (2022) 
The helpsheet explains how interest is taxable if your are not resident in the Uk for a tax year.
On your tax return, you would declare your rental income and expenses, bank interest and declare that you are not resident.
If you are still experiencing difficulty in this matte, you may wish to seek the advice of a financial adviser.

Thank you