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Posted Sun, 28 Apr 2024 20:16:00 GMT by PeterRabbit
Hello, I'm trying to complete my 2023/4 return online. I have some dividend income above the £1,000 allowance (£544). In the "view your calculation" section, the dividends do not seem to be taxed at the dividend rates. Instead, under "Pay, pensions, profit etc.", the amount given equals the total of these items minus my personal allowance plus my dividend income (less the £1,000 allowance), all taxed at 20%. There is no separate dividend tax component. This seems similar to this issue from 6 months ago, which didn't look to have a resolution: A way to get the same result as the online calculation is to first set £544 of the personal allowance against the dividends rather than salary - that way, the part of the personal allowance subtracted from salary is £544 less than it should be and the amount under "Pay, pensions, profit etc." is £544 more. This results in the tax due being higher than if the whole of the personal allowance is set against salary and the dividends are taxed at the basic rate, however. So could this be a mistake in how the online calculation is working? Note, I have recorded charitable donations that increase my basic rate limit to be just above my taxable income (including the dividends after subtracting the £1,000 allowance) and it seems possible that being close to the limit affects the tool's calculations somehow - just thought I'd mention it in case this can only be replicated in quite specific circumstances. Is there a way to supply our own calculation if the online self-assessment seems to be overestimating the tax due?
Posted Fri, 03 May 2024 10:26:32 GMT by HMRC Admin 25
Hi PeterRabbit,
This may be down to the the beneficial ordering of your income as your other income is not fully utilising the personal allowances and/or other rate bands.
Thank you. 
Posted Fri, 03 May 2024 22:14:01 GMT by PeterRabbit
Thanks for the response. My other income does exceed my personal allowance. Even if it didn't, it still shouldn't result in marginal tax on dividends of 20%, should it?
Posted Mon, 13 May 2024 11:39:22 GMT by HMRC Admin 32

It depends on the other income reported as this may still be the most beneficial tax deduction.

You should submit the return and allow 72 hours to then contact our Self Assessment team direct to review it.

Self Assessment: general enquiries

Thank you.
Posted Mon, 13 May 2024 15:15:03 GMT by Clive Smaldon
NOT accountant...Note you advise re "charitable donations" claimed...if insufficient taxable income remains after Personal Allowance this will throw all income liable at 20% to reclaim the basic rate credit on gift aid, sounds like this could be your issue?...but note, the HMRC calculation will be correct in that circumstance, you need the taxable income to cover it, otherwise the dividend rate doesent even become a factor.

Pear to Pear .
Posted Tue, 14 May 2024 20:52:51 GMT by PeterRabbit
Thanks for the responses. HMRC Admin - if I understand correctly, it would only be beneficial for the personal allowance to be set against dividend income if there were no other income subject to a higher tax rate. But I have salary above my personal allowance, and the marginal tax rate on that is always higher than for dividend income, so it should always be beneficial to set the personal allowance against the salary and have dividends be taxed at the dividend rates. Can you give an example of tax return numbers where salary exceeds the personal allowance, but it would be beneficial to set the personal allowance against dividends rather than salary, or another way in which dividends apparently get included under "Pay, pensions, profit etc." in the most beneficial arrangement? I'd like to get the correct numbers confirmed before submitting the return, which seems to me like confirming acceptance of the calculation given. I have tried getting through to the self assessment advisors, but with no success so far. Clive - nice thought but I'm paying plenty of income tax above what is due for Gift Aid.
Posted Fri, 17 May 2024 09:49:58 GMT by HMRC Admin 25
Hi PeterRabbit,
Statistics is not something that can be provided on this forum.
You can submit the return and then contact us to go through the calculation.
If it then shows that an amendment is required, this can be discussed. 
Thank you. 
Posted Fri, 17 May 2024 21:12:22 GMT by PeterRabbit
I didn't ask for statistics. I asked for an example to show how what I'm seeing could be correct.
Posted Thu, 23 May 2024 07:51:29 GMT by HMRC Admin 20
Hi PeterRabbit,
Sorry we do not have an example to give you.
To see this yourself view your calculation both with and without the dividend income.
Thank you.

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