Taxation of Wise "interest", also Trading212

Aidanmc

masonic said:

Aidanmc said:

masonic said:

Aidanmc said:

masonic said:

slinger2 said:

The summary says that none of the £100 is income, it's all "Non-UK Gains/Losses" listed under "Capital Gains and Losses, Profits from Deeply Discounted Securities and Offshore Income Gains". I'm assuming from all this that the £100 counts as a capital gain, not as income.

Do non-banks like Wise report capital gains/income to HMRC?

Is the Trading212 "interest on cash" similar?

I'm a UK tax payer.

The latter two sound like taxable income. There is a section for income from gilts and deeply discounted securities (including P2P lending income) on tax returns and is taxed like savings and bond interest. Foreign income is taxed in the same way as UK, whereas foreign capital gains from investment funds are taxed as income (i.e. no favourable capital gain treatment) unless the funds paying it have UK reporting status.

IIRC Trading212 invests in QMMFs, so that income is bond interest.

Non-banks should be reporting the income, but whether any specific firm actually does is unknown until HMRC reveals the fact. Untaxed income of this nature should be reported by the taxpayer.

Where would the bond interest on Trading 212 QMMF's be recorded on tax return?

Assuming I understand correctly that these are also offshore funds such as Irish ETFs (you should confirm this), smaller amounts, sub-£2k when I last checked, can be added via the UK interest section, box 3 (untaxed foreign interest) using the GBP value. Otherwise you'd need to use the foreign pages. If UK domiciled, then it is box 2. The notes should guide you.

Its hard to know what way to treat the 212 'interest'. Sometimes a percentage is in banks and some in QMMF.

I have some Euro cash also in 212 and its always showing as in banks 100%

They should split out the bank interest in your tax certificate. But foreign interest would still be included in the same box as QMMF income, just UK interest would be combined with 'normal' savings interest.

The complexity is quite off-putting, which is why I decided not to use their unwrapped account (and had already invested my ISA allowance in more risky things).

Yes, i just got a statement from 212 and it shows the qmmf investment is BLACKROCK AM IRELAND LTD (IE) BLACKROCK ICS STERLING LIQUIDITY SEL (GBP), so re hmrc this is treated as foreign interest?

It also show the Euro cash is in banks. So, the interest on euro cash i would need to add up for each month, convert to stg using HMRCmonthly exchange rates and enter on tax return under foreign income interest?

masonic

When an offshore investment company or fund in which you hold units makes a distribution, then that is foreign income. When it is composed of bonds then the income is taxed as interest rather than a dividend. So yes, foreign interest. This includes any excess reportable income above the distribution as discussed earlier.

For the EUR cash in banks, presumably these banks are offshore too, so would be treated the same as the QMMF interest.

I don't know if you'd need to break down to the monthly level or could get away with declaring an annual figure using the appropriate annual exchange rate.

MiserlyMartin

masonic said:

The good news is that it is a UK reporting fund, so no concerns about income tax rates being applied to all gains (see list at https://www.gov.uk/government/publications/offshore-funds-list-of-reporting-funds )

You will need to refer to the "excess reportable income" found documented by BlackRock here: https://www.blackrock.com/cash/en-gb/insight-and-education?productIdentifier=IE00B45H7020~BRSAHWJJ8~250972

This would be interest income and seems to be missing from your  Wise Tax Certificate. You will need to report it by multiplying the relevant income per share by the number you held on the record date and also deduct this from the overall gain. Perhaps this will equate to the capital loss Wise has told you about.

If it is interest and not a gain like a share or ETF gain then how should anyone report this, phone HRMC? Is this only an issue if you have to fill in self assessment forms. Don't wise report the interest to HRMC like any other UK bank? Is it included in the £1000 allowance ?

masonic

Phone or write to HMRC with the details. It isn't clear whether T212 or Wise would be responsible for reporting as they didn't pay it and do not operate as a bank. The upstream payers may not be able to link payments to individuals. Given the patchy reporting regime, it makes sense for anyone with a tax liability to confirm HMRC has a complete and accurate record of the interest they have received.

This interest would be covered by PA, starter rate for savings, PSA, if not used up.

MiserlyMartin

I decided to register for self assessment because wise euro interest is in an irish liquidity fund, so it's foreign income. Also I'm over the PA, but well under the 10. This is all a lot of hassle to use wise and T212 interest. I have a lot of work to do  the SA because as I'm sure you will imagine, as a typical MSE rate tart, I have soooo many accounts to tot up interest for and compute the total! Wise also say in their docs that when you sell or exit the fund, through withdrawals etc that is when you sell units and that is when you are liable for CGT. Luckily I am well under £3000 but its all a load of hassle and stress. There a lot to be said for PAYE and HRMC doing the tax all for you! (Can I go back to my old life and no SA!>?) It would be good if T212 euro interest was UK based then maybe I don't need to SA anymore, but I have no idea where it's based.  The App says nothing about where the EUR is put for interest, unlike the ££ one where they spilt it between 3 banks and some QMMF. But I don't even know if the UK  ££ QMMF is offshore or not either!

slinger2

MiserlyMartin said:

I decided to register for self assessment because wise euro interest is in an irish liquidity fund, so it's foreign income. Also I'm over the PA, but well under the 10. This is all a lot of hassle to use wise and T212 interest. I have a lot of work to do  the SA because as I'm sure you will imagine, as a typical MSE rate tart, I have soooo many accounts to tot up interest for and compute the total! Wise also say in their docs that when you sell or exit the fund, through withdrawals etc that is when you sell units and that is when you are liable for CGT. Luckily I am well under £3000 but its all a load of hassle and stress. There a lot to be said for PAYE and HRMC doing the tax all for you! (Can I go back to my old life and no SA!>?) It would be good if T212 euro interest was UK based then maybe I don't need to SA anymore, but I have no idea where it's based.  The App says nothing about where the EUR is put for interest, unlike the ££ one where they spilt it between 3 banks and some QMMF. But I don't even know if the UK  ££ QMMF is offshore or not either!

I'm in the same boat as you, wondering whether it's worth the faff. I'm not registered for SA currently but over my £1k allowance. With Wise you can request a tax statement, although even that's difficult to make any sense of (for me). I'm still waiting for something from HMRC for 23/24. For Wise I turned the "interest" off for 24/25.

Aidanmc

MiserlyMartin said:

I decided to register for self assessment because wise euro interest is in an irish liquidity fund, so it's foreign income. Also I'm over the PA, but well under the 10. This is all a lot of hassle to use wise and T212 interest. I have a lot of work to do  the SA because as I'm sure you will imagine, as a typical MSE rate tart, I have soooo many accounts to tot up interest for and compute the total! Wise also say in their docs that when you sell or exit the fund, through withdrawals etc that is when you sell units and that is when you are liable for CGT. Luckily I am well under £3000 but its all a load of hassle and stress. There a lot to be said for PAYE and HRMC doing the tax all for you! (Can I go back to my old life and no SA!>?) It would be good if T212 euro interest was UK based then maybe I don't need to SA anymore, but I have no idea where it's based.  The App says nothing about where the EUR is put for interest, unlike the ££ one where they spilt it between 3 banks and some QMMF. But I don't even know if the UK  ££ QMMF is offshore or not either!

From what i can see on the monthly statement from 212 the GBP QMMF is BLACKROCK AM IRELAND LTD (IE) BLACKROCK ICS STERLING LIQUIDITY SEL (GBP) INC and as i understand it would be classed as foreign interest.

The problem is the allocation varies from month to month between QMMF and Banks

The EUR interest is going to be classed as foreign interest, but what exchange rate does one use to convert it to GBP for the tax return.

MiserlyMartin

You can request a tax statement for the year from wise and use that because it is all done in GBP. It gives you your

"EXCESS REPORTED INCOME - INTEREST" and the figures in GBP as a total for the tax year. I presume that this will satisfy HRMC and the online SA form will work out the 20% tax for you. 

From the statement: "Currency – Generally conversions from the transaction currency of the investment to GBP have been converted at the ECB spot mid-rate. This may differ from other conversions to GBP shown on the other Firm
documents including but not limited to your contract and advice notes. There is an exception for corporate actions involving a capital/cash distribution or an entitlement to a capital /cash distribution where neither
the transaction currency or trade currency are in GBP but the amount is settled in GBP. In such cases the GBP amount will match the GBP amount on your advice note."

As for Trading 212, I have no idea if they give a statement in that much detail, or if the interest was paid from a  QMMF abroad, but surely someone here has dealt with this before? They did I think used to withhold your income tax from the interest but they have changed that now

masonic

Aidanmc said:

The EUR interest is going to be classed as foreign interest, but what exchange rate does one use to convert it to GBP for the tax return.

HMRC publish tables of exchange rates to be used when calculating income.