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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15946
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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Two years ago, my wife and I sold a house and moved into

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Good afternoon,
Two years ago, my wife and I sold a house and moved into (temporary) rented accommodation. We invested £125,000 in Stocks and Shares ISAs (max limit of c£15k in each of our names) and the balance in a Collective Investment Account. I wondered whether my wife needs to declare the dividend and interest distributions she received at the end of the tax year as a higher rate tax payer or whether there is a zero tax allowance threshold? The information I've seen so far appears to contradict itself. As a postscript, we have now closed these accounts as we are in the process of buying a new property.
Many thanks for your help.
Adam
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.

Hi.

The first £500 of interest is tax free for a 40% taxpayer with effect from 6 April 2016 as you can read here. Thr first £5,000 of dovidends are taxed at 0% from 6 April 2016 but that £5,000 is taken out of the 20% tax band, thereby leaving only £27,000 to be used against other income. No such thresholds existed prior to 6 April 2016.

If your wife was a higher rate taxpayer in the two years you had the non ISA investments, she will have tax to pay on the interest at 40% less the 20% tax deducted at source and on dividends at 32.5% of the gross dividend less the notional 10% tax credit.

I hope this helps but let me know if you have any further questions.

Customer: replied 1 year ago.
Thank you
Expert:  TonyTax replied 1 year ago.

Thanks.

Would you mind rating my answer before you leave the site please.

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