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I'm not sure why I consider it "good news" - but I do.
What's good about it? Example 6 states the £5000 allowance will be used against basic rate and not higher rate, so unless you are taking a salary all the way up to the higher rate you will get minimum use of it - you save £375 compared to if the £5000 allowance wasn't there whilst if you use it in the higher bracket you save £1625.
Originally posted by dynamicsaxcontractorView Post
What's good about it? Example 6 states the £5000 allowance will be used against basic rate and not higher rate, so unless you are taking a salary all the way up to the higher rate you will get minimum use of it - you save £375 compared to if the £5000 allowance wasn't there whilst if you use it in the higher bracket you save £1625.
At least we have confirmation that it comes on top of the personal allowance, rather than overlapping it.
The main useful thing from this is appreciating the part "Dividends within your allowance will still count towards your basic or higher rate bands". I can see this catching out people who assume the first 5k of divi doesn't count and then mistakenly draw 5k into the higher rate band.
My concern - once the 7.5% tax and these mechanisms are in place it going to be really quite easy to gently ratchet it up by 0.5% or 1% in successive budgets. Taxing something that isn't yet taxed is the 'visible' bit that people notice.
The main useful thing from this is appreciating the part "Dividends within your allowance will still count towards your basic or higher rate bands". I can see this catching out people who assume the first 5k of divi doesn't count and then mistakenly draw 5k into the higher rate band.
My concern - once the 7.5% tax and these mechanisms are in place it going to be really quite easy to gently ratchet it up by 0.5% or 1% in successive budgets. Taxing something that isn't yet taxed is the 'visible' bit that people notice.
It will go up in line with the CT reduction, for sure.
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