Tax on dividend income

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I am having trouble understanding why if a standard rate taxpayer receives dividend income, no additional tax is due (the notional tax credit offsetting the tax) but if that dividend pushes them into the higher rate band-by £900 in this case, the tax due applies to the whole dividend not just that above the 40% band?

System

Re:Tax on dividend income

Hi

Its only the tax above the higher rate threshold thats subject to higher rate tax, not the whole dividend, in the same way that if you any other income the charge is calculated by going through the rate bands

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Re:Tax on dividend income

Hi Julie
That's what I thought - and I've had it confirmed with another accountant but my clients summary clearly taxes all the dividend income at 20% (not just the higher rate element - which should be at 40%) but only reduces it by the dividend credit at 10%.

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Re:Tax on dividend income

The higher rate for dividend income is 32.5%

Scott.