Since April 2016 there have been a number of new ‘personal allowances’, for things like savings and dividend income. They are strictly speaking ‘zero rate bands’ currently £2,000 for savings and £5,000 for dividends.
But did you know that you can choose how your personal allowance is allocated to your income? If you let HMRC calculate your tax they won’t allocate the allowance in the most beneficial way, though. In fact their current software struggles with the concept.
So how much can you save? Well if you allocate your allowance to your highest taxed income you could save up to 25%.
Many accountants rely on their software which applies HMRC’s flawed ordering, but we double check our clients to see if a little tweak could help.
Our advice, double check the calculation or ask us for a second opinion – we’ll do it for free.