Order of Taxation (personal)

[UKSBD]

I see the new order of taxation has been published

"The new order of taxation for the purposes of the income tax calculation will be as follows:

1. income which is not property, savings or dividend income
2. property income
3. savings income
4. dividend income"

Assuming employment income of £9,000, property income of £9,600, personal allowance of £13,830

Would that mean paying 22% of £4,770?

IE your allowance is used on the £9000 employment income and then what's left is used on the property income and once your allowance is used up you pay 22% on the rest of the property income?

 

[Ziggy2024]

You can allocate your personal allowance to the property income meaning you would pay 20% rather than 22%.

 

[UKSBD]

You can allocate your personal allowance to the property income meaning you would pay 20% rather than 22%.

From what I understand, the allowance has to be taken up by the employment income 1st.

 

[Newchodge]

From what I understand, the allowance has to be taken up by the employment income 1st.

By employment income, do you mean self employed?

 

[Newchodge]

The guidance is here.

Change to tax rates for property, savings and dividend income — technical note

www.gov.uk

 

[Ziggy2024]

From what I understand, the allowance has to be taken up by the employment income 1st.

You are correct, apologies I missed this change.

 

[UKSBD]

By employment income, do you mean self employed?

it says "income not from property, savings or dividends"

From that, can we assume self employed and normal employment will be treated the same?

 

[UKSBD]

You are correct, apologies I missed this change.

Yes, not until April 2027 though

 

[Newchodge]

it says "income not from property, savings or dividends"

From that, can we assume self employed and normal employment will be treated the same?

I would expect so. I wonder what happens to income from a trust fund? You know, the vehicle used by the landed gentry in this country to avoid inheritance tax but maintain a healthy income.