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Hello, everyone. Hope everything goes on well with your revision.
I’m confused with the dividends nil rate band. Is it available for all taxpayers, including basic rate taxpayers, higher rate taxpayers and additional rate taxpayers? Or just for basic rate taxpayers and higher rate taxpayers?
On BPP text book, it says ‘There is a tax rate of 0% for dividend income within the dividend nil rate band. The dividend nil rate band is for all taxpayers.’
Then it says ‘The dividend nil rate band counts towards the basic rate limit of £33500 and the higher rate limit of 150000.’
On ACCA website, it says ‘This £5000 nil rate band is available to all taxpayers, regardless of whether they pay tax at the basic, higher or additional rate. However, the dividend nil rate band counts towards the basic rate and higher rate threshold.’
Can anyone explain that please?
Many thanks.
I phoned HMRC. They told me that £5000 nil band of dividend income is for all taxpayers, including additional rate taxpayers.
Why ACCA website add ‘only count towards basic rate and higher rate threshold?’
So confused…
Dividends nil rate band is available irrespective of any band limit threshold !
Regards
Thanks, I had the same thought as you.
But it says on the book ‘The dividend nil rate band counts towards the basic rate limit of £33500 and the higher rate limit of 150000.’
Does it not mean it’s only for basic rate and higher rate?
No.
Dividend nil rate band is available to all taxable persons, irrespective of their taxable income and tax rate band. It doesn’t matter whether they are a basic rate, high rate or additional rate tax payer.As has been stated here; the £5,000 nil rate band is available to everyone.
I think your confusion lies towards the contribution of the income tax calculation.
The £5,000 “uses up” your BR/HR bands; so, if you have Savings income of £33,000 and dividend income of £10,000, your tax calculation would be as follows:
BR Band – £33,500
£33,000 @ 20%
£500 @ 0%HR Band – up to £150,000
£4,500 @ 0%
£5,000 @ 38.1%I hope this helps clarify.
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