|
A
man aged 47 has the following income in 2004/05:
Profit from self-employment: £24,000
Employment earnings: £11,000
Dividends plus tax credits: £8,000
He also has a chargeable gain from selling shares of £10,000 (after indexation and taper relief).
He makes a contribution to a personal pension scheme of £5,000 gross, paying £3,900 net.
His tax liability is calculated as follows:
| |
Earnings |
Dividends |
Gains |
Total |
|
| |
£ |
£ |
£ |
£ |
| Income/gains |
35,000 |
8,000 |
10,000 |
53,000 |
| Less - |
|
|
|
|
| Personal allowance |
(4,745) |
|
|
(4,745) |
| Annual exemption |
|
|
(8,200) |
(8,200) |
|
| Taxable |
30,255 |
8,000 |
1,800 |
40,055 |
|
| Starting rate: |
|
|
|
|
| £2,020 at 10% |
202.00 |
|
|
202.00 |
| |
|
|
|
|
| Basic rate on
earnings: |
|
|
|
|
| £28,235 at 22% |
6,211.70 |
|
|
6,211.70 |
| (£30,255-£2,020) |
|
|
|
|
| |
|
|
|
|
| Basic rate on dividends:
|
| £6,145 at 10% |
|
614.50 |
|
614.50 |
| (£31,400+£5,000*-£30,255) |
|
|
|
|
| |
|
|
|
|
| Higher rate on
dividends: |
|
|
|
|
| £1,855 @ 32.5% |
|
602.87 |
|
602.87 |
| (£8,000-£6,145) |
|
|
|
|
| |
|
|
|
|
| Capital gains
tax |
|
|
|
|
| £1,800 @ 40% |
|
|
720.00 |
720.00 |
|
| Total tax |
6,413.70 |
1,217.37 |
720.00 |
8,351.07 |
|
| Amount payable |
|
|
|
£8,351.07 |
(before deduction
of dividend tax credits and other amounts paid)
*Higher rate tax relief on the pension payment is given by extending
the basic rate tax band by the amount of the gross payment. |
|
The Dyer Partnership, 17
Westminster Court, Hipley Street, Old Woking, Surrey GU22 9LG
Copyright © 2002 - 2004
The Dyer Partnership Limited
|
