Santander dividends and Self assessment

sausage_time

From my post above, if you have a DRIP I believe there is no ongoing income tax - but CGT when the shares are sold.

Notepad_Phil

sausage_time said:

From my post above, if you have a DRIP I believe there is no ongoing income tax - but CGT when the shares are sold.

I'd be very wary of taking anything on those particular forums as the reality of tax law, there have been plenty of times where two hmrc posters have given contradictory information often within the same thread. For instance take a look at https://community-origin.hmrc.gov.uk/customerforums/cgt/9b4850a9-3dec-ee11-a81c-6045bd0c29f5 where down in the depths someone was fed up with the differing opinions and got in direct contact with hmrc and received the news "UK DRIP TAXABLE? – YES. Shows on SA100, TR3 with normal dividends"

Personally I can see no difference between a company offering the two options of paying out in cash or providing a DRIP scheme to the two options that most funds offer of Income or Accumulation types, and you definitely have to pay income tax on the dividends paid out on both Income and Accumulation funds.

Edited to add - as these are Santander shares, presumably the relevant section of the contradictory hmrc forum post would be "FOREIGN DRIP – TAXABLE? – YES. Shows on Sa106, normal dividend."

[Deleted User]

Notepad_Phil said:

sausage_time said:

From my post above, if you have a DRIP I believe there is no ongoing income tax - but CGT when the shares are sold.

I'd be very wary of taking anything on those particular forums as the reality of tax law, there have been plenty of times where two hmrc posters have given contradictory information often within the same thread. For instance take a look at https://community-origin.hmrc.gov.uk/customerforums/cgt/9b4850a9-3dec-ee11-a81c-6045bd0c29f5 where down in the depths someone was fed up with the differing opinions and got in direct contact with hmrc and received the news "UK DRIP TAXABLE? – YES. Shows on SA100, TR3 with normal dividends"

Personally I can see no difference between a company offering the two options of paying out in cash or providing a DRIP scheme to the two options that most funds offer of Income or Accumulation types, and you definitely have to pay income tax on the dividends paid out on both Income and Accumulation funds.

agreed - I let this go as DRIP were always taxable when I was preparing lots of tax returns but there may have been revised thinking. 

Apparently there isn’t :

https://www.ii.co.uk/investing-with-ii/dividend-reinvestment

sausage_time

Notepad_Phil said:

sausage_time said:

From my post above, if you have a DRIP I believe there is no ongoing income tax - but CGT when the shares are sold.

I'd be very wary of taking anything on those particular forums as the reality of tax law, there have been plenty of times where two hmrc posters have given contradictory information often within the same thread. For instance take a look at https://community-origin.hmrc.gov.uk/customerforums/cgt/9b4850a9-3dec-ee11-a81c-6045bd0c29f5 where down in the depths someone was fed up with the differing opinions and got in direct contact with hmrc and received the news "UK DRIP TAXABLE? – YES. Shows on SA100, TR3 with normal dividends"

Personally I can see no difference between a company offering the two options of paying out in cash or providing a DRIP scheme to the two options that most funds offer of Income or Accumulation types, and you definitely have to pay income tax on the dividends paid out on both Income and Accumulation funds.

That thread is almost comical - "Oh yes they are" versus "Oh no they are not".

My takeaway remains that a DRIP (as in my Santander arrangement) has no income tax on dividends.   I'm sure I had some documentation from Santander that backed that up but I could not locate it in my files.  The consequence may be a CGT nightmare when I come to dispose.  Do I need to Section 104 pool all those dividend purchases?

I'm starting to think those Abbey National Santander shares are not worth the stress or hassle of keeping!

[Deleted User]

sausage_time said:

Notepad_Phil said:

sausage_time said:

From my post above, if you have a DRIP I believe there is no ongoing income tax - but CGT when the shares are sold.

I'd be very wary of taking anything on those particular forums as the reality of tax law, there have been plenty of times where two hmrc posters have given contradictory information often within the same thread. For instance take a look at https://community-origin.hmrc.gov.uk/customerforums/cgt/9b4850a9-3dec-ee11-a81c-6045bd0c29f5 where down in the depths someone was fed up with the differing opinions and got in direct contact with hmrc and received the news "UK DRIP TAXABLE? – YES. Shows on SA100, TR3 with normal dividends"

Personally I can see no difference between a company offering the two options of paying out in cash or providing a DRIP scheme to the two options that most funds offer of Income or Accumulation types, and you definitely have to pay income tax on the dividends paid out on both Income and Accumulation funds.

That thread is almost comical - "Oh yes they are" versus "Oh no they are not".

My takeaway remains that a DRIP (as in my Santander arrangement) has no income tax on dividends.   I'm sure I had some documentation from Santander that backed that up but I could not locate it in my files.  The consequence may be a CGT nightmare when I come to dispose.  Do I need to Section 104 pool all those dividend purchases?

I'm starting to think those Abbey National Santander shares are not worth the stress or hassle of keeping!

My takeaway is that nothing has changed. You are deemed to have received the dividend which has been used to purchase additional shares. 

https://www.shareview.co.uk/4/Info/Portfolio/santanderhelp/en/home/shareholders/Documents/Santander_DRIP_Flyer.pdf

sausage_time

[Deleted User] said:

sausage_time said:

Notepad_Phil said:

sausage_time said:

From my post above, if you have a DRIP I believe there is no ongoing income tax - but CGT when the shares are sold.

I'd be very wary of taking anything on those particular forums as the reality of tax law, there have been plenty of times where two hmrc posters have given contradictory information often within the same thread. For instance take a look at https://community-origin.hmrc.gov.uk/customerforums/cgt/9b4850a9-3dec-ee11-a81c-6045bd0c29f5 where down in the depths someone was fed up with the differing opinions and got in direct contact with hmrc and received the news "UK DRIP TAXABLE? – YES. Shows on SA100, TR3 with normal dividends"

Personally I can see no difference between a company offering the two options of paying out in cash or providing a DRIP scheme to the two options that most funds offer of Income or Accumulation types, and you definitely have to pay income tax on the dividends paid out on both Income and Accumulation funds.

That thread is almost comical - "Oh yes they are" versus "Oh no they are not".

My takeaway remains that a DRIP (as in my Santander arrangement) has no income tax on dividends.   I'm sure I had some documentation from Santander that backed that up but I could not locate it in my files.  The consequence may be a CGT nightmare when I come to dispose.  Do I need to Section 104 pool all those dividend purchases?

I'm starting to think those Abbey National Santander shares are not worth the stress or hassle of keeping!

My takeaway is that nothing has changed. You are deemed to have received the dividend which has been used to purchase additional shares. 

https://www.shareview.co.uk/4/Info/Portfolio/santanderhelp/en/home/shareholders/Documents/Santander_DRIP_Flyer.pdf

OK, thanks.  That seems clear enough!   Still have the CGT calculation nightmare.  Should have stuck them in an ISA, but back when CGT limits were much larger did not seem worth the hassle.

Imnoexpert_2

I am the original poster. My thread seems to have been hijacked.

I didn't ask about DRIP. I even enclosed my tax statement and showed how the HMRC SA site wouldn't allow me to add in the tax I had paid.

Should I be paying UK dividend tax in addition to the withholding tax?

Is the Sef assessment online faultyor have I filled it in wrong? How should I fill in the form?

I thought posting here would be quicker than waiting on the phone to talk to HMRC

wmb194

Imnoexpert_2 said:

I am the original poster. My thread seems to have been hijacked.

I didn't ask about DRIP. I even enclosed my tax statement and showed how the HMRC SA site wouldn't allow me to add in the tax I had paid.

Should I be paying UK dividend tax in addition to the withholding tax?

Is the Sef assessment online faultyor have I filled it in wrong? How should I fill in the form?

I thought posting here would be quicker than waiting on the phone to talk to HMRC

You say in your OP that you're a basic rate taxpayer; if basic rate then the allowed 10% credit against the Spanish withholding tax you've paid will cover the 8.75% you owe. If higher rate then it'll only partially offset the 33.75% owed. 

If it's not calculating correctly you could instead try entering these data in the foreign pages.

"The dividend tax rates for the 2024/25 tax year remain the same as in the 2023/24 tax year: 8.75% (basic), 33.75% (higher), and 39.35% (additional)."