Stitched up by HMRC

[Rufus Stone]

Yes, them's the rules not stitched up, but ...

Salary £18000
Dividends £32000
Savings interest £1117.

I thought my tax would be:

Salary £1086 (PAYE)
Dividends £2713 (8.75% over £1,000)
Savings £47 (40% over £1000)
Total £3846

But no, HMRC calculate

Salary £1086
Dividends £2924
Savings £123
Total £4133

Not only was my tax free savings allowance reduced to £500 even though my salary/dividends were not over £50,270 but because they add the savings interest to income before the dividend tax is imposed it's pushed some of the dividends into higher rate dividend tax.

Hate HMRC with a passion.

[BenB91]

Have you been stitched up? Or have HMRC simply applied taxation rules correctly? I think the latter.

Total tax of 8%. Seems great to me.

[Rufus Stone]

BenB91 said:

Have you been stitched up? Or have HMRC simply applied taxation rules correctly? I think the latter.

Total tax of 8%. Seems great to me.

Yes, rules.

Don't forget the 19%-25% Corporation Tax already paid on the Dividends though.

[DanL]

HMRC’s tax calculator suggests tax and NI on £50k taken as PAYE would come to around £10.5k. On that basis, you don’t seem to be doing too badly?

[Rufus Stone]

DanL said:

HMRC’s tax calculator suggests tax and NI on £50k taken as PAYE would come to around £10.5k. On that basis, you don’t seem to be doing too badly?

Rufus Stone said:

Don't forget the 19%-25% Corporation Tax already paid on the Dividends though.

[xeny]

You hate an organisation with a passion over <£300 ?

Compare those figures to a typical employee paying tax PAYE and NI, and count your blessings?

[alangla]

I was expecting a proper stitch up. I put a self-assessment in in September of last year because I expected to pay the High Income Child Benefit Charge. The resultant tax code adjustment left a nearly £200/month hole in my take-home pay until the end of the tax year. April’s pay and a return to a near-normal personal allowance was a blessed relief.

[Sheepshanks]

Rufus Stone said:

DanL said:

HMRC’s tax calculator suggests tax and NI on £50k taken as PAYE would come to around £10.5k. On that basis, you don’t seem to be doing too badly?

Rufus Stone said:

Don't forget the 19%-25% Corporation Tax already paid on the Dividends though.

Don’t forget you’re not paying employers or employees NI on the dividends - funnily enough, they drop nicely into that 19-25% bracket.

[The Rotrex Kid]

Blimey. Talk about first world problems eh?!

[Rufus Stone]

xeny said:

You hate an organisation with a passion over <£300 ?

Compare those figures to a typical employee paying tax PAYE and NI, and count your blessings?

No, I've hated them for a long time.