quickie about dividend taxation and personal allowance

[Chrysalis]

If someone has £7000 of dividend income and £5000 interest income, and no other income, how are they taxed?
On £5000 of dividend income (assuming the nil rate for dividend income is £2k), or can the personal allowance be used for that?

[pochisoldi]

If someone has £7000 of dividend income and £5000 interest income, and no other income, how are they taxed?
On £5000 of dividend income (assuming the nil rate for dividend income is £2k), or can the personal allowance be used for that?

Normal/default rule is earned income, then savings then dividends.
However this can be changed (legitmately) to give the lowest tax bill.

For the example given.
£7k of dividends + £5k of interest with a £11k personal allowance means that the order of taxation is irrelevant.
If the interest is taxed first, then only £1k of dividends is not covered by the personal allowance (covered by the dividend allowance).
If the dividends are taxed first, then the £1k of interest not covered by the personal allowance is covered by the starting rate for savings.
In both cases no tax is due.

PochiSoldi

[JohnB]

See viewtopic.php?f=49&t=7455 where @pochisoldi was very helpful going through the numbers for me. As a thought experiment, I demonstrated that you could have £8k of interest and £14k of dividends to get the point where you started paying tax.

[Chrysalis]

Thanks. For some reason I thought you couldn’t set dividends against the personal allowance, but I guess it makes sense.
What about starting rate for savings - if you had 11k of dividends and 5k say of interest, would that all be tax free? (That might be what’s in your link, I guess I should read it first )