Is there any flexibility in the treatment of personal taxation? Here is the scenario that I am considering (the numbers are invented to make the maths easier):
Imagine a single person with a full personal allowance of
4,615 who recieves dividend income of 4,615 per year plus other earnings of 1,960 per year. Can I choose what portion of the income I use the personal allowance against? Obviously I would want to count my 1,960 against my personal allowance because that then means that it is 1,960 of the dividend income that then gets pushed into the 10% tax band and for a basic rate tax payer there is no extra tax due on divi income hence there is no extra tax to pay on any of the income. If however the inland revenue forces you to count divi income first then the 4,960 of divi income soaks up the personal allowance and pushes the 1,960 of other income into the 10% tax band, and hence there will be 196 of tax to pay.Althought I've made up the figures this is a genuine issue for me at the moment so I would be most grateful if someone could give me an answer. Thanks.
- Julian.