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ACCA Strategic Professional · Advanced Taxation (UK) · Mitigation of tax by numerical analysis and reasoned argument

Oliver has taxable non-savings income of £100,000 and dividends of £30,000, all after the personal allowance. Using the bands and rates for Finance Act 2025, what is the income tax payable on his dividends?

The dividend tax is £10,228.41. £25,140 of dividends fits below £125,140, of which £500 is at 0% and £24,640 at 33.75% (£8,316). The other £4,860 is taxed at 39.35% (£1,912.41).

  1. A£9,956.25
  2. B£10,228.41Correct
  3. C£10,397.16
  4. D£11,608.25

Explanation

Non-savings income of £100,000 fills the basic band and part of the higher band, leaving £25,140 of higher band up to £125,140. The first £500 of dividends is at 0%, so £24,640 × 33.75% = £8,316. The remaining £4,860 falls in the additional band at 39.35% = £1,912.41. The total is £10,228.41. Ignoring the nil rate band gives £10,397.16.

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