Tax on savings...

not if you get child benefit it isn't

tim

In message , Jake writes

Your total income is simply the total of what you earn from work, what you get as interest, what you get from dividends, etc etc, all totalled up. [Obviously, some sources - like ISAs - are tax-tree.] This is then sorted into the various tax bands, and you are taxed at the appropriate rate on each band.

There will obviously be a time when you have used up your tax-free allowance and both of the tax bands - at 10% (if you qualify) and 20%. So, if your income is a pound into the 40% band, that additional pound will be taxed at 40%. You'll pay 40p tax on that pound, compared with

20p on the previous pound (if you like to look at it that way).

HMRC generally use up your lowest tax rate income before your higher rate ones, so, dividends are generally fully taxed before employment income. As such, if you have any employment income, the first pound above the higher rate threshold will have excess tax at 40 - the employment rate percent.

HMRC generally use up your lowest tax rate income before your higher rate ones, so, dividends are generally fully taxed before employment income. As such, if you have any employment income, the first pound above the higher rate threshold will have excess tax at 40 - the employment rate percent.

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Example, do I need to earn ~44K before I hit the 40% tax band, or is it

37,400? Personal allowance of 6,475 plus the next 37,400 taxed at 20%?

Looks like a new question, not a clarification.

I believe it is ~£44, but its academic to me.

Most people, I suspect, who are in the higher rate band will be paying tax at several different rates, including 10%, for share dividends. Most near the margin will be using tactics to move their money out of tax, or at least defer it, e.g. pensions, or even premium bonds (although they are not an efficient investment).

Some pensioners (defined by age) will be paying a marginal rate of about

30% on some of their income, although that is not how HMRC actually formulates it (they make the allowance depend on income).