Vanguard ETF dividends

Jim_Cooke

Hi, looking for some help please with Vanguard ETF dividends.
I have just got a 'Consolidated Tax Certificate' from my online broker x-o where Vanguard ETFs are listed separately to my other shares which are all UK shares and show tax taken off the dividends.
But the Vanguard ETFs are listed separately under 'Dividends and Interest from Overseas Savings' showing no tax taken off.
My question is: Does this mean I have to register for Self Assessment and pay tax on them? :eek:
(I have only ever filled out an R40 to reclaim tax paid on building society interest before, but I got fed up with the low interest rates and put the money in Vanguard ETFs )

masonic

Unless you are a higher rate taxpayer then there is no income tax liability for dividends, either from UK or non-UK listed shares. Not sure why x-o is showing "tax taken off the dividends", but the only tax that is relevant here is corporation tax paid by the companies on their profits. The UK dividends do come with a 10% tax credit that can be used against any further tax liability.

For further info: https://www.gov.uk/tax-on-dividends/how-dividends-are-taxed

Jim_Cooke

Thanks for the reply. I'm nowhere near being a higher rate taxpayer. But I see the R40 has a separate box for 'Foreign dividends' 6:1 I have always left that Foreign income section blank before. putting everything in the 'UK interest and dividends' section. Does that mean I have to put the Vanguard ETF dividends in the 'Foreign dividends' section (as x-o have listed Vanguard ETF separately as coming from Ireland)?

masonic

Yes you would.

Edit: And before you ask, yes they are eligible for tax credit

Jim_Cooke

Thanks for the reply. As my income excluding UK Share dividends is below my Personal Allowance I don't think the Tax Credits make any difference to me? But I see there is a box 6:3 Foreign Dividends Eligible for Tax Credit (net amount) Could you please help me with what to put in there.
Should I enter the Vanguard ETF dividends received in
6:3 Foreign Dividends Eligible for Tax Credit (net amount)
or in
6:1 Foreign Dividends (net amount)
?

masonic

The credit won't make any difference to the calculation. You should enter the Vanguard dividends in box 6.3, but it is unclear from either the form or the notes whether they are expecting them to be included in box 6.1 as well. The notes do state:

At boxes 6.1 and 6.3 do not add on the tax credit for dividends. You cannot claim a refund of tax credits on foreign dividends

which suggests box 6.1 includes dividends eligible for tax credit (otherwise why tell people not to add it on?)

gadgetmind

Jim_Cooke wrote: »

My question is: Does this mean I have to register for Self Assessment and pay tax on them?

Any reason why you're not using an ISA?

Jim_Cooke

Thanks for the replies. I have Maxed Out my ISA

gadgetmind

Ah, OK. My wife also has a lot of unwrapped holdings, and tracking the purchase prices though various corporate actions is hard slog. She also gets some foreign dividends from some ITs, which we always separate out on her SA, but it takes me a while to work out exactly where every time!

Jim_Cooke

Sounds like you have to do self assessment? That does look like a hard slog and is what I am hoping to avoid

gadgetmind

My wife hasn't worked for 20 years (until recently restarting) but had to do SA every single year. I've had to do a tax return every year since my last year at university, and I'm over 50 now. These things are a sad fact of life.