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Order of income

PAYE pay and self-employed profit are taxed first, then dividends on top. The personal allowance is set against pay and profit first; whatever is left over covers dividends.

The personal allowance taper

Above the income limit in the rates table, the allowance goes down by the taper rate (1 for every 2) until it reaches nothing.

The dividend allowance

Dividends inside the allowance are taxed at 0%, but they still use up band. That can push the rest of the dividends into a higher band.

Class 4 NI

Charged on self-employed profit only, at the main rate between the lower and upper profits limits and the additional rate above. Class 2 is not charged: since 6 April 2024 it is treated as paid once profit is over the small profits threshold.

Payments on account

Each one is half of the previous year’s Self Assessment bill (tax and Class 4, less PAYE deducted), due 31 January in the tax year and 31 July after it. They are not needed when that bill was under the minimum in the rates table, or more than the source share of the tax was deducted through PAYE. The balancing payment, due 31 January after the year ends, is the bill less the payments on account made towards it.

Not included

Scottish rates, savings interest, pension contributions, Gift Aid, losses, student loans, the High Income Child Benefit Charge and capital gains. Any of these would change the real bill.