Personal Tax Question - Help!!!

alexp19740

Angela receives income from ISA, Building Society Account, Dividends. Her other income after Personal Allowances have been deducted is £29950 for 2013-14.
Income from ISA = 412
Interest from Building Society = 856
Income from Dividends = 1314

Calculate for each Income type:-

a. Tax deducted at source for ISA, Interest from Building Socities and Dividends.
b. Any additional tax payable for ISA, Interest from Building Socities and Dividends.

kkelly

Hi alexp19740
You can ignore the ISA as it is exempt. 20% tax will will have been deducted off the Building Society Interest, giving a gross of 1070 and tax deducted of 214. Similarly tax of 10% will have been deducted from the dividends giving a gross of 1460 and tax deducted of 146.

Extra tax payable, well if we add the 29950+1070+1460 we get 32480 which is 470 into the higher rate band, therefore 470 of the dividends will be taxed at 32.5%, so extra tax payable will be 152.75.

hope this helps
Kevin

alexp19740

Hi Kevin,

Thanks very much for this, it really is apreciated.

hmarsh2

I agree with Kevin's answer however the correct answer is £105.75. They have taken the 470 of dividends and taxed it at 22.5% (32.5%-10%) which I can't understand why?

CeeJaySix

Dividends in the higher rate band are taxed at 32.5%, but then has the 10% credit applied against it, giving net tax due @ 22.5%.