How do I find out my Dividends

VXman

Linton said:

When you sell, the gain for CGT purposes is the increase in value minus the dividends.  So with a GIA you need to keep detailed records.  That is a simplified explanation - things get more complicated with your first ever dividend from an investment.

I'm interested in this comment. As mentioned in my above post, I am completing my first self assessment and need to declare my dividends for the first time although I have had my Vanguard GIA for some years. How are things complicated with your first dividend and does this affect me?

Doctor_Who

VXman said:

Linton said:

When you sell, the gain for CGT purposes is the increase in value minus the dividends.  So with a GIA you need to keep detailed records.  That is a simplified explanation - things get more complicated with your first ever dividend from an investment.

I'm interested in this comment. As mentioned in my above post, I am completing my first self assessment and need to declare my dividends for the first time although I have had my Vanguard GIA for some years. How are things complicated with your first dividend and does this affect me?

I'm assuming Linton is referring to equalisation, which is a return of some of the initial price paid when you receive the first dividend. Equalisation is not classed as income for taxation, but is used in calculating any gain for CGT.

https://www.willisowen.co.uk/help/equalisation-explained#:~:text=There are no tax implications,elements of the dividend payment.

VXman

You have "seen/used" them, they were reinvested in your fund. If you haven't declared them in the past when you should have then that was just an error

OK - so please educate me. As a bog standard PAYE tax payer you are saying I should have been declaring dividends payments that are within my investment fund? If that is correct it feels wrong when the actual funds overall have decreased in value over the year!

I was aware of declaring interest on savings over £1000 and of CGT when you sell investments but not aware of a tax on dividends that I haven't physically received yet.

Is this classed as normal income and so included in your tax allowance along with your other earnings? No separate threshold or anything. By the way - I'm not talking big sums here. I think dividends for 2022-23 were less than £200.

edit: just educated myself a little

Dividend allowance

Tax year	Dividend allowance
6 April 2023 to 5 April 2024	£1,000
6 April 2022 to 5 April 2023	£2,000
6 April 2021 to 5 April 2022	£2,000

Doctor_Who

VXman said:

You have "seen/used" them, they were reinvested in your fund. If you haven't declared them in the past when you should have then that was just an error

OK - so please educate me. As a bog standard PAYE tax payer you are saying I should have been declaring dividends payments that are within my investment fund? If that is correct it feels wrong when the actual funds overall have decreased in value over the year!

I was aware of declaring interest on savings over £1000 and of CGT when you sell investments but not aware of a tax on dividends that I haven't physically received yet.

Is this classed as normal income and so included in your tax allowance along with your other earnings? No separate threshold or anything. By the way - I'm not talking big sums here. I think dividends for 2022-23 were less than £200.

edit: just educated myself a little

Dividend allowance

Tax year	Dividend allowance
6 April 2023 to 5 April 2024	£1,000
6 April 2022 to 5 April 2023	£2,000
6 April 2021 to 5 April 2022	£2,000

Without the dividend payments that were reinvested in the accumulation units the fund value would have decreased even more, so they are taxable income.

ALL taxable income should be declared (not just interest over £1000). HMRC will then do the calculations and if you are eligible tax £1000 of interest @ 0%.

Same with dividend income - declare ALL of it, HMRC will then do the calculations and in your case tax ~£200 of dividends @ 0% (despite what HMRC say the 'dividend allowance' is a 0% tax band).

It's important to declare all of the taxable income even though some/all of it might be taxed @ 0%.

ColdIron

VXman said:

You have "seen/used" them, they were reinvested in your fund. If you haven't declared them in the past when you should have then that was just an error

edit: just educated myself a little

Dividend allowance

Tax year	Dividend allowance
6 April 2023 to 5 April 2024	£1,000
6 April 2022 to 5 April 2023	£2,000
6 April 2021 to 5 April 2022	£2,000

Prior to 2016 there was no dividend tax payable for basic rate tax payers (if we ignore the silly dividend tax credit). Then it was taxed at 7.50% but with a £5,000 'allowance' (a nil rate band). This was reduced to £2,000 in 2018 (thanks Phillip Hammond)

With the current 'allowance' of £500 it may not be long before we see dividends treated as income/savings with no separate bands/rates

Swipe

VXman said:

You have "seen/used" them, they were reinvested in your fund. If you haven't declared them in the past when you should have then that was just an error

OK - so please educate me. As a bog standard PAYE tax payer you are saying I should have been declaring dividends payments that are within my investment fund? If that is correct it feels wrong when the actual funds overall have decreased in value over the year!

I was aware of declaring interest on savings over £1000 and of CGT when you sell investments but not aware of a tax on dividends that I haven't physically received yet.

Is this classed as normal income and so included in your tax allowance along with your other earnings? No separate threshold or anything. By the way - I'm not talking big sums here. I think dividends for 2022-23 were less than £200.

edit: just educated myself a little

Dividend allowance

Tax year	Dividend allowance
6 April 2023 to 5 April 2024	£1,000
6 April 2022 to 5 April 2023	£2,000
6 April 2021 to 5 April 2022	£2,000

I wouldn't sweat it for £200 as the dividends would have been reported to HMRC by your broker anyway, along with any interest accrued on any cash in the account.

eskbanker

VXman said:
How come you declare dividends and get taxed on them in self assessment but not in PAYE?

I know that the dialogue has moved on a bit, but just to emphasise, PAYE is Pay As You Earn, i.e. it's only a mechanism for deducting income tax directly from earnings from employment, pensions, etc.  It has never encompassed taxation of other income, such as savings or dividends, so any liability arising from these has always been outside the PAYE system, although HMRC can adjust PAYE coding notices (in subsequent years) to collect such tax once they're aware of such liabilities, but it's always been the taxpayer's responsibility to ensure that the correct amount of taxable income is declared.

Doctor_Who

Swipe said:

VXman said:

You have "seen/used" them, they were reinvested in your fund. If you haven't declared them in the past when you should have then that was just an error

OK - so please educate me. As a bog standard PAYE tax payer you are saying I should have been declaring dividends payments that are within my investment fund? If that is correct it feels wrong when the actual funds overall have decreased in value over the year!

I was aware of declaring interest on savings over £1000 and of CGT when you sell investments but not aware of a tax on dividends that I haven't physically received yet.

Is this classed as normal income and so included in your tax allowance along with your other earnings? No separate threshold or anything. By the way - I'm not talking big sums here. I think dividends for 2022-23 were less than £200.

edit: just educated myself a little

Dividend allowance

Tax year	Dividend allowance
6 April 2023 to 5 April 2024	£1,000
6 April 2022 to 5 April 2023	£2,000
6 April 2021 to 5 April 2022	£2,000

I wouldn't sweat it for £200 as the dividends would have been reported to HMRC by your broker anyway, along with any interest accrued on any cash in the account.

I wasn't aware of this. I've always adjusted the dividend income figure in my personal tax account myself.

[Deleted User]

Linton said:

Redlander said:

OK, so I've just received a CTC for 2022-3 and it shows just over £4000 in dividends.  All my funds are accumulation funds. Do I have to declare these dividends on my Self-Assessment? Or, since the effect of the dividends is to increase the value of my holdings, am I only liable for Capital Gains Tax should I eventually sell these holdings?

You declare the reinvested dividends which are taxed according to the dividend income rules.

When you sell, the gain for CGT purposes is the increase in value minus the dividends.  So with a GIA you need to keep detailed records.  That is a simplified explanation - things get more complicated with your first ever dividend from an investment.

LInton please correct me if I'm wrong here, but as I understand it, the complication with the equalisation payment doesn't just happen with the first ever dividend.  Equalisation can also occur if you buy more units between Ex Div dates in subsequent years as these the new units will be treated as group 2 and therefore subject to an equalisation payment.  

EthicsGradient

[Deleted User] said:

Linton said:

Redlander said:

OK, so I've just received a CTC for 2022-3 and it shows just over £4000 in dividends.  All my funds are accumulation funds. Do I have to declare these dividends on my Self-Assessment? Or, since the effect of the dividends is to increase the value of my holdings, am I only liable for Capital Gains Tax should I eventually sell these holdings?

You declare the reinvested dividends which are taxed according to the dividend income rules.

When you sell, the gain for CGT purposes is the increase in value minus the dividends.  So with a GIA you need to keep detailed records.  That is a simplified explanation - things get more complicated with your first ever dividend from an investment.

LInton please correct me if I'm wrong here, but as I understand it, the complication with the equalisation payment doesn't just happen with the first ever dividend.  Equalisation can also occur if you buy more units between Ex Div dates in subsequent years as these the new units will be treated as group 2 and therefore subject to an equalisation payment.  

Yes - the first dividend for any investment in the fund, whether it's the first ever investment, or an addition.

Though, having said that, I looked back at the last time I purchased an OEIC in a general account, and I can't work out the payments. It's an OEIC that distributes just once a year, (ex-div in January, paid in March). I bought units each month from May 2019 to Dec 2019 inclusive. The CTC, and the account statement for Jan to March 2020, shows the units bought from May to Oct inclusive as Group 1, and only the Nov and Dec purchases as Group 2, with equalisation and a smaller dividend.

I can't work out why.