Self-assessment - dividends and Capital distributions questions

Boleyn19

I have just received my consolidated tax certificate from a unit trust.

The Dividend columns are Dividend, equalisation and amount reinvested - do I put the dividend amount in the SA?

And the Capital distributions - where do I put this figure?

Thanks in advance

Bookworm225

please confirm - do you receive the dividend as cash money paid into your bank account (ie the unit trust is an "income fund") or is any dividend entitlement used to purchase additional units in the fund so you do not receive physical cash but the number of units you own increases over time (ie an "accumulation fund")? 

"reinvested" implies this is an accumulation fund and that figure should be the total of dividend + equalisation?

Boleyn19

Bookworm225 said:

please confirm - do you receive the dividend as cash money paid into your bank account (ie the unit trust is an "income fund") or is any dividend entitlement used to purchase additional units in the fund so you do not receive physical cash but the number of units you own increases over time (ie an "accumulation fund")? 

"reinvested" implies this is an accumulation fund and that figure should be the total of dividend + equalisation?

The dividends are reinvested.

probate_slave

Not sure why @Bookworm225 would think this.

Equalisation payments are not taxable income but a return of capital. The OP is taxable on the dividend alone. It makes no difference that it is an accumulation fund.

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg57705

The capital distribution is also, by definition, not treated as income. And if the value is small compared to the value of the shareholding, it does not need to be reported as a disposal for CGT.

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg57835

poseidon1

probate_slave said:

Not sure why @Bookworm225 would think this.

Equalisation payments are not taxable income but a return of capital. The OP is taxable on the dividend alone. It makes no difference that it is an accumulation fund.

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg57705

The capital distribution is also, by definition, not treated as income. And if the value is small compared to the value of the shareholding, it does not need to be reported as a disposal for CGT.

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg57835

Just to complete your analysis, equalisation receipts are deducted from the original acquisition cost of the unit trust for future CGT purposes. This can be a bit of pain with regard to unwrapped monthly unit trust investing whether it be income or accumulation units.

Boleyn19

poseidon1 said:

probate_slave said:

Not sure why @Bookworm225 would think this.

Equalisation payments are not taxable income but a return of capital. The OP is taxable on the dividend alone. It makes no difference that it is an accumulation fund.

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg57705

The capital distribution is also, by definition, not treated as income. And if the value is small compared to the value of the shareholding, it does not need to be reported as a disposal for CGT.

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg57835

Just to complete your analysis, equalisation receipts are deducted from the original acquisition cost of the unit trust for future CGT purposes. This can be a bit of pain with regard to unwrapped monthly unit trust investing whether it be income or accumulation units.

Please could you help with what to do with the capital distribution on the Consolidated Tax Certificate.

poseidon1

Boleyn19 said:

poseidon1 said:

probate_slave said:

Not sure why @Bookworm225 would think this.

Equalisation payments are not taxable income but a return of capital. The OP is taxable on the dividend alone. It makes no difference that it is an accumulation fund.

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg57705

The capital distribution is also, by definition, not treated as income. And if the value is small compared to the value of the shareholding, it does not need to be reported as a disposal for CGT.

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg57835

Just to complete your analysis, equalisation receipts are deducted from the original acquisition cost of the unit trust for future CGT purposes. This can be a bit of pain with regard to unwrapped monthly unit trust investing whether it be income or accumulation units.

Please could you help with what to do with the capital distribution on the Consolidated Tax Certificate.

As indicated in my last post I tend to avoid holding unit trusts on general investment accounts  with the investment platforms because they are pain for tax compliance.

However  I did depart from my rule this year and equalisation payment was received on a newly acquired equity income fund.

What I will do is wait until I receive the consolidated certificate detailing all equalisation receipts ( I might be temped to buy more funds this year).

Using the certificate I will then manually adjust the book cost of the fund or funds concerned, by deducting the equalisation payment received from their original purchase costs. This will ensure I have properly addressed the CGT profile of the fund on eventual sale.

However, my suspicion is a lot of people who purchase unwrapped funds have no idea they should be doing this, so you are to be congratulated for being so meticulous.

Boleyn19

poseidon1 said:

Boleyn19 said:

poseidon1 said:

probate_slave said:

Not sure why @Bookworm225 would think this.

Equalisation payments are not taxable income but a return of capital. The OP is taxable on the dividend alone. It makes no difference that it is an accumulation fund.

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg57705

The capital distribution is also, by definition, not treated as income. And if the value is small compared to the value of the shareholding, it does not need to be reported as a disposal for CGT.

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg57835

Just to complete your analysis, equalisation receipts are deducted from the original acquisition cost of the unit trust for future CGT purposes. This can be a bit of pain with regard to unwrapped monthly unit trust investing whether it be income or accumulation units.

Please could you help with what to do with the capital distribution on the Consolidated Tax Certificate.

As indicated in my last post I tend to avoid holding unit trusts on general investment accounts  with the investment platforms because they are pain for tax compliance.

However  I did depart from my rule this year and equalisation payment was received on a newly acquired equity income fund.

What I will do is wait until I receive the consolidated certificate detailing all equalisation receipts ( I might be temped to buy more funds this year).

Using the certificate I will then manually adjust the book cost of the fund or funds concerned, by deducting the equalisation payment received from their original purchase costs. This will ensure I have properly addressed the CGT profile of the fund on eventual sale.

However, my suspicion is a lot of people who purchase unwrapped funds have no idea they should be doing this, so you are to be congratulated for being so meticulous.

Thanks for your reply but it does not answer my question. The equalisation of Dividend Distribution is different from the Capital Distribution on the CTC - there is no equalisation there, just one amount. So is the Capital Distribution to be entered as dividend, CGT or income?

poseidon1

Boleyn19 said:

poseidon1 said:

Boleyn19 said:

poseidon1 said:

probate_slave said:

Not sure why @Bookworm225 would think this.

Equalisation payments are not taxable income but a return of capital. The OP is taxable on the dividend alone. It makes no difference that it is an accumulation fund.

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg57705

The capital distribution is also, by definition, not treated as income. And if the value is small compared to the value of the shareholding, it does not need to be reported as a disposal for CGT.

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg57835

Just to complete your analysis, equalisation receipts are deducted from the original acquisition cost of the unit trust for future CGT purposes. This can be a bit of pain with regard to unwrapped monthly unit trust investing whether it be income or accumulation units.

Please could you help with what to do with the capital distribution on the Consolidated Tax Certificate.

As indicated in my last post I tend to avoid holding unit trusts on general investment accounts  with the investment platforms because they are pain for tax compliance.

However  I did depart from my rule this year and equalisation payment was received on a newly acquired equity income fund.

What I will do is wait until I receive the consolidated certificate detailing all equalisation receipts ( I might be temped to buy more funds this year).

Using the certificate I will then manually adjust the book cost of the fund or funds concerned, by deducting the equalisation payment received from their original purchase costs. This will ensure I have properly addressed the CGT profile of the fund on eventual sale.

However, my suspicion is a lot of people who purchase unwrapped funds have no idea they should be doing this, so you are to be congratulated for being so meticulous.

Thanks for your reply but it does not answer my question. The equalisation of Dividend Distribution is different from the Capital Distribution on the CTC - there is no equalisation there, just one amount. So is the Capital Distribution to be entered as dividend, CGT or income?

I would need to see exactly what you are referring to from the certificate concerned and the quantum involved. Can you provide a redacted copy thereof? 

DRS1

Boleyn19 said:

poseidon1 said:

Boleyn19 said:

poseidon1 said:

probate_slave said:

Not sure why @Bookworm225 would think this.

Equalisation payments are not taxable income but a return of capital. The OP is taxable on the dividend alone. It makes no difference that it is an accumulation fund.

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg57705

The capital distribution is also, by definition, not treated as income. And if the value is small compared to the value of the shareholding, it does not need to be reported as a disposal for CGT.

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg57835

Just to complete your analysis, equalisation receipts are deducted from the original acquisition cost of the unit trust for future CGT purposes. This can be a bit of pain with regard to unwrapped monthly unit trust investing whether it be income or accumulation units.

Please could you help with what to do with the capital distribution on the Consolidated Tax Certificate.

As indicated in my last post I tend to avoid holding unit trusts on general investment accounts  with the investment platforms because they are pain for tax compliance.

However  I did depart from my rule this year and equalisation payment was received on a newly acquired equity income fund.

What I will do is wait until I receive the consolidated certificate detailing all equalisation receipts ( I might be temped to buy more funds this year).

Using the certificate I will then manually adjust the book cost of the fund or funds concerned, by deducting the equalisation payment received from their original purchase costs. This will ensure I have properly addressed the CGT profile of the fund on eventual sale.

However, my suspicion is a lot of people who purchase unwrapped funds have no idea they should be doing this, so you are to be congratulated for being so meticulous.

Thanks for your reply but it does not answer my question. The equalisation of Dividend Distribution is different from the Capital Distribution on the CTC - there is no equalisation there, just one amount. So is the Capital Distribution to be entered as dividend, CGT or income?

Didn't @probate_slave answer this question already?

poseidon1

DRS1 said:

Boleyn19 said:

poseidon1 said:

Boleyn19 said:

poseidon1 said:

probate_slave said:

Not sure why @Bookworm225 would think this.

Equalisation payments are not taxable income but a return of capital. The OP is taxable on the dividend alone. It makes no difference that it is an accumulation fund.

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg57705

The capital distribution is also, by definition, not treated as income. And if the value is small compared to the value of the shareholding, it does not need to be reported as a disposal for CGT.

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg57835

Just to complete your analysis, equalisation receipts are deducted from the original acquisition cost of the unit trust for future CGT purposes. This can be a bit of pain with regard to unwrapped monthly unit trust investing whether it be income or accumulation units.

Please could you help with what to do with the capital distribution on the Consolidated Tax Certificate.

As indicated in my last post I tend to avoid holding unit trusts on general investment accounts  with the investment platforms because they are pain for tax compliance.

However  I did depart from my rule this year and equalisation payment was received on a newly acquired equity income fund.

What I will do is wait until I receive the consolidated certificate detailing all equalisation receipts ( I might be temped to buy more funds this year).

Using the certificate I will then manually adjust the book cost of the fund or funds concerned, by deducting the equalisation payment received from their original purchase costs. This will ensure I have properly addressed the CGT profile of the fund on eventual sale.

However, my suspicion is a lot of people who purchase unwrapped funds have no idea they should be doing this, so you are to be congratulated for being so meticulous.

Thanks for your reply but it does not answer my question. The equalisation of Dividend Distribution is different from the Capital Distribution on the CTC - there is no equalisation there, just one amount. So is the Capital Distribution to be entered as dividend, CGT or income?

Didn't @probate_slave answer this question already?

I thought so. 

I asked to see the distribution in question in case for some reason it did not appear to meet the 'small 'criteria for the purposes of a straight forward deduction from the base cost of  the investment concerned.

I had assumed the OP had taken the time to actually read the HMRC links provided by @probate_slave but remained uncertain for some reason, but perhaps that was not the case?