Question 5
How is tax paid on my investments?
On bank and building society interest, tax of 20% is taken off at source. On dividends there is a tax credit of 10%. In both cases these deductions will be deemed to satisfy your tax liability in full unless you pay tax at the higher rate. In some cases part or all of the tax taken away from interest may be refunded. The following table shows the tax rates related to income above the personal allowance (where applicable).
Income Tax Rate %
| Income Band | Non Savings Income | Savings Income | Dividends |
|---|---|---|---|
| £0 – £2,440 Starting Rate for Savings | N/A | 10% | N/A% |
| £0 – £37,400 Basic Rate | 20% | 20% | 10% |
| £37,401 – £150,000 Higer Rate | 40% | 40% | 32.5% |
| Is over £150,000 | 50% | 50% | 42.5% |
