Interest and Dividend tax allowance

For 2106/17 how will the £5000 nil rate on interest and the £5000 nil rate on dividends work together?
For example, if person A has £8500 earned income, £6500 interest income and £6000 dividend income. Would they pay zero tax (PA £11000, SPA £1000, Dividend and Interest £5000 each at nil rate). Or pay tax of £1000 as their total taxable income exceeds £17000 and so they lose the £5000 interest tax allowance at zero rate?
Parents
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Reply
  • Tim, you are right of course. Thank you for spotting the better answer. You can indeed allocate the personal allowance in the manner most beneficial to the taxpayer. This is a very good illustration of how the increasing number of rates and allowances are making our tax system so much more complicated. Let's hope that writers of other apps remember to build in that check. 
Children
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