Skip to main content

This is a new service – your feedback will help us to improve it.

Posted Wed, 13 Jan 2021 23:08:46 GMT by BCM2020
Earnings are £114k and dividends are £2k and pension payments just under £14k. Self assessment tax calculation is reducing my personal allowance from £12,429 to £11,429 thus meaning that my dividends are being taxed at 20.5% and not free of tax. I know this as if I remove the dividends then my personal allowance does not reduce down and I pay £410 less tax. Why is it doing this - is the system not working? I thought there was a tax free dividend allowance of £2,000?
Posted Sat, 16 Jan 2021 16:09:17 GMT by marm2021
I have seen a similar problem with the allowance apparently not being applied and I am paying tax on my
Posted Tue, 19 Jan 2021 12:53:56 GMT by BCM2020
Are there any HMRC Admins that can help here please? If someone receives £1,000 of dividends then does this count towards reducing their personal allowance if earning between £100,000 and £125,000 thus meaning that these dividends end up increasing the person's tax bill - therefore not really being tax free despite being below the £2,000 limit?
Posted Wed, 20 Jan 2021 19:57:16 GMT by HMRC Admin 14
Hi, You dividend income is taxable  and may affect your Personal Allowance if your total taxable income is over £100,000. Please see link below re. Personal Allowance:adjusted net income.  
If you check your calculation you will see you have been given the Dividend Allowance,  the first £2000  been taxed at 0% 
https://www.gov.uk/guidance/adjusted-net-income
https://www.gov.uk/guidance/adjusted-net-income
Posted Wed, 27 Jan 2021 14:10:26 GMT by HMRC Admin 2
Hi,

Your dividend income is taxable and may affect your Personal Allowance if your total taxable income is over £100000, see link below:

Personal Allowances: adjusted net income

Thank you.

You must be signed in to post in this forum.