HMRC Filing Exclusion 103 will affect customers with non-savings and savings income of more than the basic rate band and there are reliefs and allowances of more than the basic rate band (usually £34,500). Some of the relief will be set against dividend income when it is more beneficial to set against non-savings or savings income. This is because the SA tax calculator is not taking into account the tax reduction for non-savings/savings income above the basic rate band.
Below is an example of how the calculation is currently working and a revised calculation showing how the relief could be used more beneficially.
| Current calculation | |||||||
| Non Savings | Savings | Dividends | Total | Tax | |||
| (Employment) | |||||||
| Income | 66,500.00 | 21,000.00 | 20,000.00 | 107,500.00 | |||
| PA | -11,850.00 | -11,850.00 | |||||
| Relief for loan interest | -35,650.00 | -14,350.00 | -50,000.00 | ||||
| Taxable | 19,000.00 | 21,000.00 | 5,650.00 | 45,650.00 | |||
| Starting rate 0% | 0.00 | 0.00 | |||||
| 0% | 500.00 | 2,000.00 | 2,500.00 | 0.00 | |||
| 7.5% | 0.00 | 0.00 | |||||
| 20% | 19,000.00 | 15,000.00 | 34,000.00 | 6,800.00 | |||
| 32.5% | 3,650.00 | 3,650.00 | 1,186.25 | ||||
| 40.00% | 5,500.00 | 5,500.00 | 2,200.00 | ||||
| 19,000.00 | 21,000.00 | 5,650.00 | 45,650.00 | 10,186.25 | |||
| Net tax payable | 10,186.25 | ||||||
| Beneficial ordering | |||||||
| Non Savings | Savings | Dividends | Total | Tax | |||
| Income | 66,500.00 | 21,000.00 | 20,000.00 | 107,500.00 | |||
| PA | -11,850.00 | -11,850.00 | |||||
| Relief for loan interest | -50,000.00 | -50,000.00 | |||||
| Taxable | 4,650.00 | 21,000.00 | 20,000.00 | 45,650.00 | |||
| Starting rate 0% | 0.00 | 0.00 | |||||
| 0% | 500.00 | 2,000.00 | 2,500.00 | 0.00 | |||
| 7.5% | 6,850.00 | 6,850.00 | 513.75 | ||||
| 20% | 4,650.00 | 20,500.00 | 25,150.00 | 5,030.00 | |||
| 32.5% | 11,150.00 | 11,150.00 | 3,623.75 | ||||
| 40.00% | 0.00 | 0.00 | |||||
| 4,650.00 | 21,000.00 | 20,000.00 | 45,650.00 | 9,167.50 | |||
| Net tax payable | 9,167.50 |
In the example above, the relief for loan interest in the original calculation is partially used against dividend income, whereas the beneficial calculation has used it all against non savings income, resulting in a tax savings of £1,018.75.
If you have a scenario which applies to this exclusion, a paper return should be filed together with a Reasonable Excuse form which refers to the exclusion number.
To print your tax return with a Reasonable Excuse form: