Use of Dividend tax allowance

MallyGirl

premium bonds are a gamble (with capital preserved). I have been moderately lucky and won about double what I would have made in interest over the same period

Sarahspangles

MallyGirl said:

premium bonds are a gamble (with capital preserved). I have been moderately lucky and won about double what I would have made in interest over the same period

So it’s you that’s getting my prizes! 

DRS1

You could always buy some low coupon gilts that mature in two years time.  The coupon would be interest and not dividends but very little.  The gain on maturity would be CGT free
For example

UNITED KINGDOM T26 Stock | London Stock Exchange

Sorry just realised it is 2025 now!
I could not find one for 2027 so here is a 2028

UNITED KINGDOM TN28 Stock | London Stock Exchange

Ciprico

On a similar subject what are the collective experts views on buying CSH2 in a gia to capitalise on the 3k CGT allowance....?

Pat38493

Ciprico said:

On a similar subject what are the collective experts views on buying CSH2 in a gia to capitalise on the 3k CGT allowance....?

I am far from the greatest expert here, but CSH2 looks like it's mainly cash money market fund, so doesn't that mean it's subject to savings tax rather than CGT?

Pat38493

ColdIron said:

If you own the stock on the ex dividend date you have the right to the dividend. If you are a basic rate taxpayer you have a £500 'allowance'. This could save you £43.75 tax. Of course the share price will then drop and the usual market movements could work against you anyway, as would any trading costs. With an ETF you could open yourself up to Excess Reportable Income (ERI) reporting, I won't use ETFs in a GIA because of the hassle which is worse in dividend paying ETFs (both ERI and dividends) and stick to Investment Trusts

Gaming trading on dividends is unlikely to be a fruitful activity

Funnily enough, HMWO just briefly hit a 52W high unexpectedly this morning.  I think this is the day that the dividends are declared.  I guess that's not a coincidence?  Also HMWS has gone up significnatly which is the same fund but the accumulation version.  Is this because the dividends delcaration was more than the markets expected?

Secret2ndAccount

The dividend is the sum of small contributions from the constituents. These have already been declared by the individual companies, days, weeks or months ago, so there should be no surprises. 
There were substantial fluctuations in £/$ today. The majority of the holdings in HMWO are priced in $, so movements in the exchange rate can similarly move HMWO. Try converting the price of HMWO to $, and see if it has moved substantially less.

eskbanker

Pat38493 said:

Ciprico said:

On a similar subject what are the collective experts views on buying CSH2 in a gia to capitalise on the 3k CGT allowance....?

I am far from the greatest expert here, but CSH2 looks like it's mainly cash money market fund, so doesn't that mean it's subject to savings tax rather than CGT?

No, it means that the income generated would be regarded as interest rather than dividends for income tax purposes, but capital gains would still be subject to CGT.

Pat38493

eskbanker said:

Pat38493 said:

Ciprico said:

On a similar subject what are the collective experts views on buying CSH2 in a gia to capitalise on the 3k CGT allowance....?

I am far from the greatest expert here, but CSH2 looks like it's mainly cash money market fund, so doesn't that mean it's subject to savings tax rather than CGT?

No, it means that the income generated would be regarded as interest rather than dividends for income tax purposes, but capital gains would still be subject to CGT.

On a podcast I was listening to the other day, it said that if a fund is more than 50% cash, all proceeds are treated as savings interest.  What is different about this CSH2 fund that makes it capital gain - when I looked at the portfolio it looks like it's all cash and bonds but maybe I missed something.

eskbanker

Pat38493 said:

eskbanker said:

Pat38493 said:

Ciprico said:

On a similar subject what are the collective experts views on buying CSH2 in a gia to capitalise on the 3k CGT allowance....?

I am far from the greatest expert here, but CSH2 looks like it's mainly cash money market fund, so doesn't that mean it's subject to savings tax rather than CGT?

No, it means that the income generated would be regarded as interest rather than dividends for income tax purposes, but capital gains would still be subject to CGT.

On a podcast I was listening to the other day, it said that if a fund is more than 50% cash, all proceeds are treated as savings interest.  What is different about this CSH2 fund that makes it capital gain - when I looked at the portfolio it looks like it's all cash and bonds but maybe I missed something.

As above, you need to differentiate between income and capital growth, rather than the more nebulous concept of 'all proceeds'.