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Dear Tax Tutor,
Can you please explain why did you use 32.5 for dividend income in the end of the answer. If dividend income is 2000, should not we use 10% ….Hi soruh, in example 7 the gross dividend of £2,000 now falls within the higher rate band!! Review note 3.5 (g) on page 7 of the Notes as well as your tax rates and allowances page which tells you that dividend income falling within the higher rate band is taxed at 32.5%. 10% was applicable in example 6 as there the dividend income fell entirely within the basic rate band.
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