Consultant client asks:
I am proposing to take extra dividends this year to the value of £10K My income this year is £15.5K pension Plus £12K salary plus £4K dividends already taken Plus £0.5K other dividends from shares taking income up to £32K. How much more can I take to keep me below the higher rate tax bracket?
We answer:
The basic rate income threshold for the tax year 2023/24 is £50,270 - this is the income you can earn in the year without paying higher rate tax. Your income so far this year is £15.5K pension, plus your £12,570 salary plus £4,000 dividends already taken and £0.5K other dividends from shares taking income up to £32,570. Which will leave you with an additional £17,694 available to you to take your income up to the basic rate threshold.
