Self Assessment and Dividends

poppystar

I have a few small share holdings that generate dividends. One of them is automatically reinvested in new shares. My understanding was that I should declare the dividend used to purchase the new shares (even though I never see the money) in the dividends section along with the dividends paid directly from the other holdings.

Looking at HMRC discussions on this has confused me as it appears to say that dividends reinvested in this way are not taxed. There was a lot of contradictory discussion hence getting quite confused. Any clarification from you more experienced self assessors welcome, thanks.

molerat

https://www.gov.uk/hmrc-internal-manuals/savings-and-investment-manual/saim5150

‘Stock dividends’ may also be referred to as ‘scrip dividends’ or ‘bonus issues’.

Stock dividends as defined in the legislation are treated as income by virtue of CTA10/S1049, and taxable as savings income under ITTOIA05/PART4/CHAPTER5 S409 to S414.

poppystar

molerat said:

https://www.gov.uk/hmrc-internal-manuals/savings-and-investment-manual/saim5150

‘Stock dividends’ may also be referred to as ‘scrip dividends’ or ‘bonus issues’.a

Stock dividends as defined in the legislation are treated as income by virtue of CTA10/S1049, and taxable as savings income under ITTOIA05/PART4/CHAPTER5 S409 to S414.

Thanks. So as I thought originally they go in the ‘dividend’ section of the self assessment? It’s the terminology that’s getting to me. 

eskbanker

poppystar said:

molerat said:

https://www.gov.uk/hmrc-internal-manuals/savings-and-investment-manual/saim5150

‘Stock dividends’ may also be referred to as ‘scrip dividends’ or ‘bonus issues’.a

Stock dividends as defined in the legislation are treated as income by virtue of CTA10/S1049, and taxable as savings income under ITTOIA05/PART4/CHAPTER5 S409 to S414.

Thanks. So as I thought originally they go in the ‘dividend’ section of the self assessment? It’s the terminology that’s getting to me. 

Yes, reinvesting dividends doesn't stop them being dividends, so they need to be declared as such.  If you cite where you've seen something that suggests otherwise, it should be possible to identify where any confusion has arisen?

poppystar

eskbanker said:

poppystar said:

molerat said:

https://www.gov.uk/hmrc-internal-manuals/savings-and-investment-manual/saim5150

‘Stock dividends’ may also be referred to as ‘scrip dividends’ or ‘bonus issues’.a

Stock dividends as defined in the legislation are treated as income by virtue of CTA10/S1049, and taxable as savings income under ITTOIA05/PART4/CHAPTER5 S409 to S414.

Thanks. So as I thought originally they go in the ‘dividend’ section of the self assessment? It’s the terminology that’s getting to me. 

Yes, reinvesting dividends doesn't stop them being dividends, so they need to be declared as such.  If you cite where you've seen something that suggests otherwise, it should be possible to identify where any confusion has arisen?

Thanks - it was on the HMRC forum, a question being raised by someone else and it got conflicting replies from the HMRC advisors. I haven’t bookmarked the link unfortunately. 

I thought the Self Assessment would be quite straightforward but I did the HMRC webinars for first time self assessors last week and ended up far more confused after! All the big figures were no problem but I wanted some clarity on the dividends and also on the Gift Aid sections. 

As I wasn’t aware I’d need Gift Aid values during the year in order to do the self assessment I’m currently trawling through old emails in the hope of getting the correct figures for that. If I miss off some values there I hope it won’t cause problems as it would be a genuine error. I now have additional spreadsheets set up for next year!