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  • RE: Dividend tax calculation error in online SA?

    I find myself in a similar situation, albeit more straightforward, as there are only salary and dividends to consider. If I understand you correctly, what HMRC are saying is that dividends (which would be taxed at 8.75%) use up personal allowance first, and then salary (which would be taxed at 20%) uses up anything left. As a result, any incremental dividends would be taxed at 20%. This is undesirable but understandable, but contradicts the example given on gov.uk (tax-on-dividends) which clearly shows the personal allowance being taken off the wages figure. So (if I have understood your explanation) who is correct? HMRC or gov.uk?