VLS60 Inc

ColdIron

Hugeass304 said:

ColdIron said:

[Deleted User] said:

Would you also happen to know the Equalisation rate for the LS60 please 

There is no published 'rate'. The equalisation payment is just that portion of the declared dividend that is classified and treated as return of capital for tax purposes and is entirely dependant on the date you buy. If you buy soon after the ex date your dividends received might be 90% of the full declared dividend and 10% return of capital. If you buy soon before the ex date it will be the other way around

Thanks Coldiron, is the split made clear when the dividend is paid? Mine are held in an Halifax Share Account, some in an ISA and some not

If it's in ISA or SIPP it's irrelevant. If held outside a tax wrapper you will get a formal Annual Consolidated Tax Certificate from your platform which will tell you the precise split which will be acceptable by HMRC for dividend/income tax purposes

Hugeass304

Thank you all for your help with this

GeoffTF

Hugeass304 said:

ColdIron said:

[Deleted User] said:

Would you also happen to know the Equalisation rate for the LS60 please 

There is no published 'rate'. The equalisation payment is just that portion of the declared dividend that is classified and treated as return of capital for tax purposes and is entirely dependant on the date you buy. If you buy soon after the ex date your dividends received might be 90% of the full declared dividend and 10% return of capital. If you buy soon before the ex date it will be the other way around

Thanks Coldiron, is the split made clear when the dividend is paid? Mine are held in an Halifax Share Account, some in an ISA and some not

The distributions of VLS 60 are indeed taxed as dividends. Equalistion is explained here:

https://www.willisowen.co.uk/help/equalisation-explained

My only unsheltered OEIC holdings are held directly with Vanguard. With their old service, I received a tax certificate through the post when the dividend was paid, telling me the dividend and equalisation. With their new online service, I get a cryptic pop-up with the equalisation per share after the dividend is paid. With Halifax, I expect that you have to look under Valuation > Dividends.

[Deleted User]

ColdIron said:

[Deleted User] said:

Would you also happen to know the Equalisation rate for the LS60 please 

There is no published 'rate'. The equalisation payment is just that portion of the declared dividend that is classified and treated as return of capital for tax purposes and is entirely dependant on the date you buy. If you buy soon after the ex date your dividends received might be 90% of the full declared dividend and 10% return of capital. If you buy soon before the ex date it will be the other way around

I don't think this statement is correct.  On the Vanguard website, if you look under corporate section of the LS60%inc,  you will see 2 rates - one for the dividend and one for the equalisation.  For 2021, the rates were 2.279783 and 1.167427 respectively.  It clearly states the Group 2 units will have an equalisation rate 1.167427.  

ColdIron

I don't understand that. If you look at page 56 in the link below Vanguard explain it as I would expect

• The Company intends to operate income equalisation arrangements in respect of the pro rata entitlement to share in any accrued income of a Fund existing at the time a Share is purchased by a Shareholder and which is therefore reflected in the purchase price of the Share. If a Shareholder acquires Shares at a date when the Fund has accrued income which has not yet been allocated, the ACD may credit to the Shareholder’s equalisation account part of the subscription price representing the accrued income which would be attributable to those Shares on the date of purchase.

https://www.vanguardinvestor.co.uk/rs/gre/gls/1.3.0/documents/2077/gb

Edit: If you look at the link in GeoffTF's post it tallies and provides an example of a 50/50 allocation for units bought at the mid point between ex dates and another with a 66/33 split

[Deleted User]

It would appear that the illustration in GeoffTF's link is just a crude example.  In practice, my understanding is that the platform will publish both the dividend and an equalisation rate which are applied to Group 1 and Group 2 units   As I understand it, the equalisation rate is applicable to all investors; it is a fixed rate and applies to whether the units were acquired before or just after the Ex div date.  This was explained in another thread some time ago by Bowlhead99. I hope I haven't totally misunderstood it.