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More Content

Error in Personal Tax

MALTD
Solved
Posted By

Hello,

I'm having a problem with sage personal tax. I have put in details for foreign interest, foreign dividends, employment and uk interest and the tax calculation that shows up is incorrect. Please see screenshot below.

The non-savings income (employment less £12570) should be £35,837. The savings interest should then be £500 at 0%, then basic rate (20%) for £1363, higher rate (40%) should be for £222 and then the dividends should be £500 at 0%, £924 at higher rate (33.75%). Can anyone shed any light on this or am i missing something? Any help would be much appreciated.

Thanks,

  • 0

    Hi MALTD,

    The screenshot you mentioned didn't come through on the post, I wondered if you could attach it as a reply here? If you choose "Insert" > Image/video/file then you'll be able to upload it to a post.

    Thanks,

    Andy,
    Sage UKI

  • 0 in reply to AndyR.

    Hi ANDYR,

    Thank you for letting me know. I have tried to insert the screenshot in this post.

    Thanks again.Sage Personal Tax Calculation Issue.docx

  • +1
    verified answer

    Hi MALTD,

    I have had a look over the calculation you attached, and can confirm that it is acting in compliance with the HMRC calculation which is provided to us and all other software providers.

    I believe that the difference between what you are expecting, and what is shown in the calculation attached is rooted in a different allocation of the Personal Allowance than you have suggested.

     
    Rather than the full £12,570 PA being allocated to employment income, the most tax efficient way of calculating your clients' tax liability involves allocating the Personal Allowance as follows:

     

    £10,707 to Employment Income

    £1,179 to Interest

    £278 to Dividends from Foreign Companies

    £406 to Foreign Savings

     

    Following this method results in only £646 of Foreign Dividend Income being charged at the higher rate of tax, and results in the most favourable tax liability.


    Adam
    Sage UKI

  • 0 in reply to Adam Mc

    Hi Adam,

    Thank you so much for taking the time to look at my query and provide a thorough explanation.

    Thanks again.

*Community Hub is the new name for Sage City