Starting Rate Allowance

[hiriskpaul]

I am working on a spreadsheet to help me make decisions concerning tax under the new rules. My old one with dividend tax credits etc. was in need of a complete re-write. I am getting there, but not totally clear on the rules for the Starting Rate Allowance SRA. All the examples I have seen discuss "Non-savings Income" (NSI). The Starting Rate Allowance is (as far as I understand) worked out like this:

NSI <= £11,000, SRA = £5000
£11,000 < NSI < £16,000, SRA = £16,000 - NSI
NSI >= £16,000, SRA = £0

If anyone thinks differently, please let me know!

The question I have is what goes in to NSI? Clearly savings (interest) does not, but in all the examples I have seen dividends are not mentioned. Are dividends excluded from NSI? i.e. is NSI essentially the same as earned income + pensions, rent, etc. making up the first rung of income to be taxed?

[hiriskpaul]

I have been experimenting with the ageuk calculator and they seem to think that non-savings income does not include dividends.

This also makes most sense from the way income tax piles up, with earnings from employment etc. taxed first, then savings income taxed, then dividend income taxed.

[PinkDalek]

I have been experimenting with the ageuk calculator and they seem to think that non-savings income does not include dividends.

I believe that is correct as is, I think, the summary of what is included that you gave in your OP.

I haven't reread it in detail but there was an interesting discussion on the AgeUk calculator and the subject matter here (which from memory may have discussed the £500 you mentioned in air04's Topic here):

http://boards.fool.co.uk/tax-calc-inter ... sort=whole
https://web.archive.org/web/20170127120 ... sort=whole

[hiriskpaul]

Thanks for the links. I had a quick look, clearly a lot of people as confused about the new system as I was. What ever happened to the office of tax simplification?

I think I have something that works for me now. Not perfect, e.g. does not handle foreign dividends with witholding taxes, capital gains or numerous allowances, but ok for what I need at present.