Reinvested company shares - do I need to declare to HMRC?

hoagie007

I have been given a few thousand pounds of company shares, with more to come up to about £35K over the next four years.

Dividends for the shares are used to buy more shares. I haven't seen any of the profit from the shares nor do I plan to sell them for many years.

I do not currently fill out a tax return and would like to avoid that onerous process. Even though I do not take the dividends, must I fill out a tax return each year? Presumably I would need to fill out a tax return when I sell them and take the cash.

Thanks in advance.

eskbanker

Dividends are still taxable income, even if used to purchase more shares, but there is an annual 'allowance' (strictly a nil-rate band, i.e. taxable income taxed at 0%) of £1,000.

If your dividend income is below that, then no action needed.

If your dividend income is over £10K, then you'll need to self-assess.

In between those figures, you can notify HMRC less formally:

https://www.gov.uk/tax-on-dividends

Unless the shares are within an ISA (which would eliminate any dividend taxation too), you'll need to consider (and report, if applicable) capital gains tax when selling some or all of them.

Notepad_Phil

eskbanker said:

Dividends are still taxable income, even if used to purchase more shares, but there is an annual 'allowance' (strictly a nil-rate band, i.e. taxable income taxed at 0%) of £1,000.

If your dividend income is below that, then no action needed.

If your dividend income is over £10K, then you'll need to self-assess.

In between those figures, you can notify HMRC less formally:

https://www.gov.uk/tax-on-dividends

Unless the shares are within an ISA (which would eliminate any dividend taxation too), you'll need to consider (and report, if applicable) capital gains tax when selling some or all of them.

Note that the £1000 dividend allowance is changing to £500 per annum from April 6th.