ETF in a GIA

Hoenir

MoneyMan01 said:

What would happen if someone didn’t know how dividends they’d earned? Or what would happen if you didn’t report. If the individual didn’t know what was owed, how would HMRC, and what would they do to take money/how could they specify the amount they would need to take? 

Every individual is expected to keep records that allow them to give a complete and accurate return.  Where appropriate they should seek professional advice. 

HMRC use a database system called Connect. You might be surprised how much they know about your affairs. 

MoneyMan01

I knew it would be interpreted that way, which was not my intention. My comments were in relation to the statement about regular people investing via a GIA and an etf without understanding that everything needs to be tracked, which I am learning about now before doing anything. 

General public could think that they invest, and then HMRC let you know how much is owed. Given the replies, you are saying they do have the information. As they have the information, they could either send the tax bill, or adjust tax codes. 

That would be better all round, because they ensure they get the correct amount. 

If someone mis miscalculated and reports more than they owe, HMRC have to work that out anyway surely, and only take the amount they should? If they’re doing that anyway, they may as well send the bill themselves to start with, or as just tax code. 

GeoffTF

MoneyMan01 said:

I knew it would be interpreted that way, which was not my intention. My comments were in relation to the statement about regular people investing via a GIA and an etf without understanding that everything needs to be tracked, which I am learning about now before doing anything. 

General public could think that they invest, and then HMRC let you know how much is owed. Given the replies, you are saying they do have the information. As they have the information, they could either send the tax bill, or adjust tax codes. 

That would be better all round, because they ensure they get the correct amount. 

If someone mis miscalculated and reports more than they owe, HMRC have to work that out anyway surely, and only take the amount they should? If they’re doing that anyway, they may as well send the bill themselves to start with, or as just tax code. 

The British tax system relies on self assessment and penalties for tax evasion. It would be too difficult and expensive to change that, but there is some slow progress in that direction. If you declare too much tax, in the normal course of events, HMRC just pockets it.

MoneyMan01

GeoffTF said:

If you declare too much tax, in the normal course of events, HMRC just pockets it.

Yet if it’s a genuine miscalculation the other way round, they would be sure to get what they are owed. Should be the same both ways. 

masonic

MoneyMan01 said:

I knew it would be interpreted that way, which was not my intention. My comments were in relation to the statement about regular people investing via a GIA and an etf without understanding that everything needs to be tracked, which I am learning about now before doing anything. 

General public could think that they invest, and then HMRC let you know how much is owed. Given the replies, you are saying they do have the information. As they have the information, they could either send the tax bill, or adjust tax codes. 

That would be better all round, because they ensure they get the correct amount. 

If someone mis miscalculated and reports more than they owe, HMRC have to work that out anyway surely, and only take the amount they should? If they’re doing that anyway, they may as well send the bill themselves to start with, or as just tax code. 

There is a generous £20,000 per tax year ISA allowance, and for those making retirement provisions, an even more generous pension annual allowance, that would enable the vast majority of regular people to avoid these tax-related issues.

HMRC do not get a complete set of information, but they will get enough information in many cases to suggest that tax is due and has not been paid. It is only the taxpayer who has the holistic view of their own affairs. HMRC then need to investigate individuals who fail to comply with their legal requirement to declare income or capital gains upon which tax is due. This is costly, and is partly funded by interest and penalty charges levied on those individuals.

wmb194

MoneyMan01 said:

I knew it would be interpreted that way, which was not my intention. My comments were in relation to the statement about regular people investing via an etf without understanding that every thing needs to be tracked, which I am learning about now before doing anything. 

Keeping track of dividends and interest is easy*. The part that some people will get wrong is the ERI but you don't have any excuse not to report to the best of your ability. As discussed upthread, if you want to avoid the worry of ETFs look at investment trusts. Particularly the UK domiciled ones, they're relatively straightforward.

Unfortunately when you make a decent amount of taxable money you enter the world of record keeping and self assessment. If your affairs are straightforward it isn't overly burdensome.

https://www.theaic.co.uk/aic/find-compare-investment-companies?sortid=Name&desc=false

*I enter everything as I go along in MS Money 2005 (other databases are available) but a spreadsheet will do.

MoneyMan01

wmb194 said:

MoneyMan01 said:

I knew it would be interpreted that way, which was not my intention. My comments were in relation to the statement about regular people investing via an etf without understanding that every thing needs to be tracked, which I am learning about now before doing anything. 

Keeping track of dividends and interest is easy*. The part that some people will get wrong is the ERI but you don't have any excuse not to report to the best of your ability. As discussed upthread, if you want to avoid the worry of ETFs look at investment trusts. Particularly the UK domiciled ones, they're relatively straightforward.

Unfortunately when you make a decent amount of taxable money you enter the world of record keeping and self assessment. If your affairs are straightforward it isn't overly burdensome.

https://www.theaic.co.uk/aic/find-compare-investment-companies?sortid=Name&desc=false

*I enter everything as I go along in MS Money 2005 (other databases are available) but a spreadsheet will do.

This is helpful, thank you. 

As you can tell, this is the first time I am discovering all of this, so I have a lot of reading and self teaching to do on the subject, as I imagine everyone else did to some degree when getting to this stage. 

Bobziz

 This may help @MoneyMan01

https://www.justetf.com/uk/news/passive-investing/how-etfs-are-taxed-in-the-uk.html#determined

Also for help finding what ERI to report try https://www.kpmgreportingfunds.co.uk/?ReturnUrl=/Home/PublicInvestor

GeoffTF

MoneyMan01 said:

GeoffTF said:

If you declare too much tax, in the normal course of events, HMRC just pockets it.

Yet if it’s a genuine miscalculation the other way round, they would be sure to get what they are owed. Should be the same both ways. 

Tax payers money is spent on challenging individuals who are not paying enough tax, but not on challenging individuals who are paying too much tax. You can submit corrections to your tax return for a limited number of years if you find an error. If you need help in submitting your tax return, you can hire an accountant. You will have to pay for that. HMRC will not pay for it.

poseidon1

Should the OP consider in future to invest direct into overseas dividend paying shares via a GIA, then there is also the potentially complex matter of overseas dividend tax at source of up to 35% ( depending on the country), not to mention foreign currency exposure on income, gains or losses.

UK double tax agreements with those countries may mitigate/ reduce the UK taxes thereon, but for most investors who do not have an accountant or specific personal experience of such matters, direct investing in overseas stocks and shares are probably best avoided, unless  via a Sipp or ISA.