How to establish which funds are 'Investment Trusts' for HMRC tax form?

RomfordNavy · 19 May 2020 at 1:09PM

Have just discovered that for my tax form I need to split the income received from various investment funds into those which are Investment Trusts and those which are plain UK Equity funds (SA100, box 4 or box 5). Can I just look at the name and include those that have the word 'Trust' in them or do I need to look in more detail at the structure or each fund to see if it is actually an investment trust?

bowlhead99 · 19 May 2020 at 1:20PM

No, you can't go off the name.

If it's an open ended fund with a once-per day published price for subscription or redemption, it's not an investment trust. Investment trusts are listed on the stock exchange with a three or four-character 'ticker' code and, like shares of individual companies, can be bought and sold in real time with a live price available every minute of the day and usually a transaction cost to buy or sell. You might not have any of these at all, if you haven't been buying shares on the stock market. But investment trusts and UK OEICs and unit trusts go in the same box 5 anyway:

5 "Other dividends - the amount received - read the notes":
extract from notes:
"This includes dividend distributions from authorised unit trusts, open-ended investment companies, and investment trusts.

Not every investment company listed on the stock market is an 'investment trust' but if you tell us which stock market listed companies you hold, if any, someone here would know or could get their factsheet or annual report and tell you because it would be stated in the annual reports and RNSs. You could of course look it up in the annual reports for yourself- if you don't know where to find the annual reports for an investment trust you bought, not sure how you would have decided to invest in them...

port_of_spain · 19 May 2020 at 2:22PM

If your investments are held on a platform, I'd go with what their tax certificate says. It will usually effectively give you one figure which is supposed to be what goes in box 4, and another figure for box 5.

I admit to being a bit puzzled about investment trusts specifically, because the SA100 guidance notes do suggest they go in box 5, but I've seen platforms include them in the box 4 figure.

Dividends in boxes 4 and 5 are taxed in exactly the same way as one another, so it doesn't affect the tax due. Though we are of course required to fill in the tax return honestly, to the best of our ability.

Albermarle · 19 May 2020 at 2:33PM

if you don't know where to find the annual reports for an investment trust you bought, not sure how you would have decided to invest in them...

Yes indeed. It is well known that the majority of investors ( via pensions particularly) have no idea what they are invested in .

However the vast majority will be in some kind of default OEIC fund and would be highly unlikely to have money in an investment trust unknowingly. In addition the vast majority of investors are invested via pensions and ISA's , so no tax reporting needed anyway.

Seems strange that somebody should have Investment trusts in an unwrapped holding , without realising it .

Sorcerer2018 · 19 May 2020 at 3:36PM

Also be aware not all investment trusts are based in the UK, so you have to declare those as overseas income, and REITs are treated differently if they pay out PIDs, also worth noting you don't need to declare anything inside your ISA. Sometimes trusts pay out "Income Interest" instead of "Dividends" which are not the same thing, sometimes they pay out both. Who said "tax doesn't need to be taxing" :-(