Allocation of allowances - Dividends and Interest?

Jul 04, 2006 1 Replies

Has something changed in the way daivineds and interest are allocated against allowances?



Well, when I was experimenting with the IR's online tax programme, I was surprised to find that, if I reduced my interest, leaving everything else constant, my tax liability went UP!!!



I cannot re-experiment, since I have submitted the return. Still, it seems(ed) very odd ????!!!!. Has that shyster, and fellow countryman I am ashamed to say, gone and done it again. Expletive reluctantly deleted. We're not all like that in Scotland.



Since I am on the borderline of several allowances, such as the 10% rate and the age allowance, I do feel that I would be grateful to anyone who could explain this to me, so that I can try to shuffle my assets around to best effect, which I do need to do.


Just guessing...but it's probably just a refund of tax they've assumed you've paid on that interest.

Bank interest is charged at 20% at source. If you're in the 10% band then you are due a tax *refund* on any interest you get, because for every 1 gross interest you earn, the bank will have taken 20p in tax off you by order of your fellow countryman. You can then get 10p of it back off him if you CBA to claim it.

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