Tax on share dividends - Contacting HMRC to make payment

drgigglesuk

So, I genuinely and invertedly, have realised I haven't paid tax on share dividends for the tax yr 21/22. For that yr, I earnt a total of £2,735.61; so £735.61 over the £2000.00 limit. I'm new to investing via apps and simply lost track between the two of the total I'd made. I reported this to HMRC on 2/3/23 and they said I've got 3 months to complete and return a Self Assessment form. I've never looked at one of these forms, the more I read the more confused I get. Do I simply complete the section where I'm reporting a change, or the whole form? Will they need an itemised breakdown of my calculations. I've read you need a Unique Tax Reference for which I applied last Sunday, but nothing is through yet. I just want to pay what I owe plus any additional fine I've incurred. Any advice would be appreciated.  

ColdIron

I'm surprised they didn't just take the figure you gave them but SA isn't hard. Your UTR will turn up in time and after you log in it will ask some questions to figure out which SA sections you need to comp[ete. Dividends will be one of them. As long as your affairs are simple they will take a single figure (no breakdown). I assume they are held unwrapped (Not ISA or SIPP) so your platform should have provided a Consolidated Tax Certificate, dig it out and use the figure on that

drgigglesuk

ColdIron said:

I'm surprised they didn't just take the figure you gave them but SA isn't hard. Your UTR will turn up in time and after you log in it will ask some questions to figure out which SA sections you need to comp[ete. Dividends will be one of them. As long as your affairs are simple they will take a single figure (no breakdown). I assume they are held unwrapped (Not ISA or SIPP) so your platform should have provided a Consolidated Tax Certificate, dig it out and use the figure on that

Thanks - everything is outside of an ISA sadly. I've never seen this Consolidated Tax Certificate though - I'm using Trading 212 and Freetrade apps. I've simply used dividend e-mails from Freetrade to tally up the figure - Trading 212 at least provides a spreadsheet. 

ColdIron

Hmm, I thought they had to provide them for GIAs but maybe it's one of the shortcomings of these new startups like T212 etc, The mainstream platforms always provide them in my experience. The whole point is to provide an accurate information for taxation purposes (HMRC will accept the details contained)

Maybe phone or message them

Give serious thought to tucking all your investments into an ISA then you can forget about tax, (including Capital Gains, excess reportable income, interest etc), record keeping etc

sevenhills

drgigglesuk said:

ColdIron said:

I'm surprised they didn't just take the figure you gave them but SA isn't hard. Your UTR will turn up in time and after you log in it will ask some questions to figure out which SA sections you need to comp[ete. Dividends will be one of them. As long as your affairs are simple they will take a single figure (no breakdown). I assume they are held unwrapped (Not ISA or SIPP) so your platform should have provided a Consolidated Tax Certificate, dig it out and use the figure on that

Thanks - everything is outside of an ISA sadly. I've never seen this Consolidated Tax Certificate though - I'm using Trading 212 and Freetrade apps. I've simply used dividend e-mails from Freetrade to tally up the figure - Trading 212 at least provides a spreadsheet. 

Using a more expensive platform and their ISA/SIPP could save you some money?

wmb194

drgigglesuk said:

So, I genuinely and invertedly, have realised I haven't paid tax on share dividends for the tax yr 21/22. For that yr, I earnt a total of £2,735.61; so £735.61 over the £2000.00 limit. I'm new to investing via apps and simply lost track between the two of the total I'd made. I reported this to HMRC on 2/3/23 and they said I've got 3 months to complete and return a Self Assessment form. I've never looked at one of these forms, the more I read the more confused I get. Do I simply complete the section where I'm reporting a change, or the whole form? Will they need an itemised breakdown of my calculations. I've read you need a Unique Tax Reference for which I applied last Sunday, but nothing is through yet. I just want to pay what I owe plus any additional fine I've incurred. Any advice would be appreciated.  

You'll need to complete all of the relevant sections e.g., income from employment, interest from savings accounts and so on.

If you Google it there have been a lot of people asking and complaining to Freetrade about its lack of a consolidated tax certificate but it isn't the end of the world, you can do manually and it'll probably be correct, or at least close enough. Including Freetrade, this is what I do with all my brokerage accounts.

There can be a couple of 'gotchas' with dividends e.g., you might need to add ETF excess reportable income, UK vs foreign* and whether a dividend should actually be classed as foreign interest,** so you might also need to complete the dividend and interest parts of the foreign section if your foreign dividend income is greater than, IIRC, £300. Below this IIRC you can include it in the standard section with your UK dividends (there's a separate field for them).

*For instance dividends paid by many popular ETFs are foreign as the ETFs are domiciled in Ireland and dividends from companies and funds domiciled in Jersey and Guernsey are considered foreign.

**If it's a foreign domiciled company or fund that invests in (IIRC) >60% interest paying assets. You'll find that some of these are declared by the investment company as a dividend e.g., the Channel Islands based Investment Trusts that invest in debt securities and might be classified as such on a consolidated tax certificate - I wouldn't trust a broker to get it right - but they should actually be classified as foreign interest.

drgigglesuk

wmb194 said:

drgigglesuk said:

So, I genuinely and invertedly, have realised I haven't paid tax on share dividends for the tax yr 21/22. For that yr, I earnt a total of £2,735.61; so £735.61 over the £2000.00 limit. I'm new to investing via apps and simply lost track between the two of the total I'd made. I reported this to HMRC on 2/3/23 and they said I've got 3 months to complete and return a Self Assessment form. I've never looked at one of these forms, the more I read the more confused I get. Do I simply complete the section where I'm reporting a change, or the whole form? Will they need an itemised breakdown of my calculations. I've read you need a Unique Tax Reference for which I applied last Sunday, but nothing is through yet. I just want to pay what I owe plus any additional fine I've incurred. Any advice would be appreciated.  

You'll need to complete all of the relevant sections e.g., income from employment, interest from savings accounts and so on.

If you Google it there have been a lot of people asking and complaining to Freetrade about its lack of a consolidated tax certificate but it isn't the end of the world, you can do manually and it'll probably be correct, or at least close enough. Including Freetrade, this is what I do with all my brokerage accounts.

There can be a couple of 'gotchas' with dividends e.g., you might need to add ETF excess reportable income, UK vs foreign* and whether a dividend should actually be classed as foreign interest,** so you might also need to complete the dividend and interest parts of the foreign section if your foreign dividend income is greater than, IIRC, £300. Below this IIRC you can include it in the standard section with your UK dividends (there's a separate field for them).

*For instance dividends paid by many popular ETFs are foreign as the ETFs are domiciled in Ireland and dividends from companies and funds domiciled in Jersey and Guernsey are considered foreign.

**If it's a foreign domiciled company or fund that invests in (IIRC) >60% interest paying assets. You'll find that some of these are declared by the investment company as a dividend e.g., the Channel Islands based Investment Trusts that invest in debt securities and might be classified as such on a consolidated tax certificate - I wouldn't trust a broker to get it right - but they should actually be classified as foreign interest.

Hi - I don't believe I've any ETF dividend income, but I did hold a number of US stocks, such as with companies like Tyson Foods. I've just looked at this on my Trading 212 app and it looks like tax has already been taken off; 'withholding tax' - I guess thats something totally different and doesn't let me off the hook with HMRC?

ChilliBob

I'm surprised they didn't just let you pay the amount you owed. I had this for years when I'd just pay the tax on dividends and everything else was pays etc. You could try calling again and speaking to somebody else?

wmb194

drgigglesuk said:

wmb194 said:

drgigglesuk said:

So, I genuinely and invertedly, have realised I haven't paid tax on share dividends for the tax yr 21/22. For that yr, I earnt a total of £2,735.61; so £735.61 over the £2000.00 limit. I'm new to investing via apps and simply lost track between the two of the total I'd made. I reported this to HMRC on 2/3/23 and they said I've got 3 months to complete and return a Self Assessment form. I've never looked at one of these forms, the more I read the more confused I get. Do I simply complete the section where I'm reporting a change, or the whole form? Will they need an itemised breakdown of my calculations. I've read you need a Unique Tax Reference for which I applied last Sunday, but nothing is through yet. I just want to pay what I owe plus any additional fine I've incurred. Any advice would be appreciated.  

You'll need to complete all of the relevant sections e.g., income from employment, interest from savings accounts and so on.

If you Google it there have been a lot of people asking and complaining to Freetrade about its lack of a consolidated tax certificate but it isn't the end of the world, you can do manually and it'll probably be correct, or at least close enough. Including Freetrade, this is what I do with all my brokerage accounts.

There can be a couple of 'gotchas' with dividends e.g., you might need to add ETF excess reportable income, UK vs foreign* and whether a dividend should actually be classed as foreign interest,** so you might also need to complete the dividend and interest parts of the foreign section if your foreign dividend income is greater than, IIRC, £300. Below this IIRC you can include it in the standard section with your UK dividends (there's a separate field for them).

*For instance dividends paid by many popular ETFs are foreign as the ETFs are domiciled in Ireland and dividends from companies and funds domiciled in Jersey and Guernsey are considered foreign.

**If it's a foreign domiciled company or fund that invests in (IIRC) >60% interest paying assets. You'll find that some of these are declared by the investment company as a dividend e.g., the Channel Islands based Investment Trusts that invest in debt securities and might be classified as such on a consolidated tax certificate - I wouldn't trust a broker to get it right - but they should actually be classified as foreign interest.

Hi - I don't believe I've any ETF dividend income, but I did hold a number of US stocks, such as with companies like Tyson Foods. I've just looked at this on my Trading 212 app and it looks like tax has already been taken off; 'withholding tax' - I guess thats something totally different and doesn't let me off the hook with HMRC?

There's a double taxation treaty with the US where US withholding tax for UK tax residents is set to 15%* so it will let you off the hook for the tax you've paid assuming it hasn't been withheld at the US's standard 30%, but if you pay higher rate tax you can owe more than this. HMRC also won't refund this US tax if you owe nothing. It could be that it isn't a problem with T212 if it's instantly converted into sterling but with foreign currency dividends you might need to go through these and use the correct exchange rates for the day/month** it was received.

As I understand it, non-distributing ETFs can still report excess reportable income but you instead add this to your CGT base cost rather than treat it as dividend income. I avoid ETFs that don't pay dividends and accumulating OEICs as they just seem to make life more complicated.

Get everything you can in an Isa. You don't have to worry about any of this!

*For pension funds including SIPPs this is zero i.e. no w/h tax due, otherwise 15% including Isas.

**I use the exact or next day but other people have said they use a monthly rate that IIRC the BoE states somewhere.

Dazed_and_C0nfused

drgigglesuk said:

So, I genuinely and invertedly, have realised I haven't paid tax on share dividends for the tax yr 21/22. For that yr, I earnt a total of £2,735.61; so £735.61 over the £2000.00 limit. I'm new to investing via apps and simply lost track between the two of the total I'd made. I reported this to HMRC on 2/3/23 and they said I've got 3 months to complete and return a Self Assessment form. I've never looked at one of these forms, the more I read the more confused I get. Do I simply complete the section where I'm reporting a change, or the whole form? Will they need an itemised breakdown of my calculations. I've read you need a Unique Tax Reference for which I applied last Sunday, but nothing is through yet. I just want to pay what I owe plus any additional fine I've incurred. Any advice would be appreciated.  

How did you report this to HMRC?

There is normally no need to complete a Self Assessment return just because you have dividend income unless it is £10,000 or more.

You must complete the whole of each bit that is relevant to you.  So if you have (taxable) pension income you declare it.  If you aren't self employed you don't complete the self employment page.  Etc etc.

Marcon

drgigglesuk said:

So, I genuinely and invertedly, have realised I haven't paid tax on share dividends for the tax yr 21/22. For that yr, I earnt a total of £2,735.61; so £735.61 over the £2000.00 limit. I'm new to investing via apps and simply lost track between the two of the total I'd made. I reported this to HMRC on 2/3/23 and they said I've got 3 months to complete and return a Self Assessment form. I've never looked at one of these forms, the more I read the more confused I get. Do I simply complete the section where I'm reporting a change, or the whole form? Will they need an itemised breakdown of my calculations. I've read you need a Unique Tax Reference for which I applied last Sunday, but nothing is through yet. I just want to pay what I owe plus any additional fine I've incurred. Any advice would be appreciated.  

It's hardly the crime of the century - you may not even get a fine - and possibly not even get charged interest on what is going to be a modest underpayment of tax.

Check if you need to complete a SA tax return: https://www.gov.uk/check-if-you-need-tax-return

If the answer is 'no', go back to HMRC and question why you need to complete one. It sounds as if HMRC may have got a bit over-enthusiastic, or possibly you were a bit too apologetic(!) about your oversight and they are wondering if you've overlooked anything else.