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Personal Tax Question - Help!!!

alexp19740alexp19740 New MemberRegistered Posts: 16
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.

Comments

  • kkellykkelly Feels At Home Registered Posts: 51
    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
    Glm
  • alexp19740alexp19740 New Member Registered Posts: 16
    Hi Kevin,

    Thanks very much for this, it really is apreciated.
  • hmarsh2hmarsh2 Registered Posts: 5
    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?
  • CeeJaySixCeeJaySix Well-Known Registered Posts: 645
    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%.
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