Holding ETFs in a non isa account

ColdIron

DjangoUnchained said:

dunstonh said:

I did intend to hold them for 10+ years.

That is not a great idea.  You want to be using your annual CGT allowance and potentially doing bed & ISA if you are not using the ISA allowance in full each year.

So, some activity each year would be needed.

i intend to fully use my isa allowance anyway. If the dividends are just reininvested and not taken out is ther CGT on this?

Dividends and capital gains are separate regimes. The dividend is taxable, it doesn't matter what you do with it afterwards

Of course if you buy more stock you may receive more dividends in the future and may even get more (or less) capital gains with that stock but that's for the future. Nothing to do with the dividend you just got

masonic

wmb194 said:

ivormonee said:

wmb194 said:

I always go for ETFs that pay out dividends or interest and in my experience with these ERI hasn’t been a concern.

From what I gathered from the previous posts, ERI seems to be relevant to distributing ETFs which have reporting status. It appears to be the difference between an amount reported and what had been paid during a reporting period, ie. the excess. It is the total reported amount (distribution received + ERI) that is liable to tax (rather than just the distributed amount).

In my experience it's the accumulating ones that are an issue, the current extreme case being CSH2. The ones that pay out dividends and interest don't tend to have much left undistributed so therefore the ERI is usually small or non-existent. In the 24/25 tax year six of the seven distributing ETFs I owned in a GIA on the relevant date reported zero ERI and for the one that did the amount was minuscule.

Many distributing ETFs have non-zero ERI in some years. Vanguard is one of the best for distributing all income in its original ETF series (VUKE,VMID,VEUR,VWRL etc), but if you look at their combined reports you'll see there is something to report within this series in most years.

Anything that is not exactly zero requires the same amount of work if you complete a tax return. You can't know in advance which will create a reporting liability, although an accumulation ETF always will.

wmb194

masonic said:

wmb194 said:

ivormonee said:

wmb194 said:

I always go for ETFs that pay out dividends or interest and in my experience with these ERI hasn’t been a concern.

From what I gathered from the previous posts, ERI seems to be relevant to distributing ETFs which have reporting status. It appears to be the difference between an amount reported and what had been paid during a reporting period, ie. the excess. It is the total reported amount (distribution received + ERI) that is liable to tax (rather than just the distributed amount).

In my experience it's the accumulating ones that are an issue, the current extreme case being CSH2. The ones that pay out dividends and interest don't tend to have much left undistributed so therefore the ERI is usually small or non-existent. In the 24/25 tax year six of the seven distributing ETFs I owned in a GIA on the relevant date reported zero ERI and for the one that did the amount was minuscule.

Many distributing ETFs have non-zero ERI in some years. Vanguard is one of the best for distributing all income in its original ETF series (VUKE,VMID,VEUR,VWRL etc), but if you look at their combined reports you'll see there is something to report within this series in most years.

Anything that is not exactly zero requires the same amount of work if you complete a tax return. You can't know in advance which will create a reporting liability, although an accumulation ETF always will.

Right but what I'm getting at is that the big, scary ERI boogeyman isn't as much of a worry with these.

The KPMG database is fairly comprehensive and diminishes the effort required to report. The only ETF of mine that wasn't in there for 24/25 was by WisdomTree.

https://www.kpmgreportingfunds.co.uk/

ivormonee

Wouldn't the fund manager produce annual (or periodic) reports showing the ERIs for each individual ETF, including (and particularly) for accumulating funds? If they did/ do, this would take the hassle out of trying to fluff about for ages trying to obtain bits of info. to manually work things out. Or, The KPMG database (as per above) sounds like it has (almost) all this info. in one place, so better still. As accumulating funds don't distribute anything, the ERI figure will be the total to be reported for tax purposes.

masonic

ivormonee said:

Wouldn't the fund manager produce annual (or periodic) reports showing the ERIs for each individual ETF, including (and particularly) for accumulating funds? If they did/ do, this would take the hassle out of trying to fluff about for ages trying to obtain bits of info. to manually work things out. Or, The KPMG database (as per above) sounds like it has (almost) all this info. in one place, so better still. As accumulating funds don't distribute anything, the ERI figure will be the total to be reported for tax purposes.

It would be ideal if it was included in the consolidated tax certificate issued by most platforms, but it isn't.

Several popular fund houses provide a downloadable annual report at a bookmarkable webpage, but the KPMG site provides an alternative.

If I had to hold an ETF or other offshore fund unwrapped, then I'd prefer Acc so all the income is in one figure, but holding a distributing OEIC or investment trust with GBP distributions makes reporting as easy as it could be.

DjangoUnchained

im a bit of a newbie to this, i will have to go away and look up what all these initials really mean. beginning to wish i hadnt bothered and just only used my isa allowance but then thats seriously going to limit me.

kimwp

DjangoUnchained said:

im a bit of a newbie to this, i will have to go away and look up what all these initials really mean. beginning to wish i hadnt bothered and just only used my isa allowance but then thats seriously going to limit me.

I'm in the same position as you, a nice problem to have, but a head scratching problem for a newbie to non-ISA investing.

wmb194

DjangoUnchained said:

im a bit of a newbie to this, i will have to go away and look up what all these initials really mean. beginning to wish i hadnt bothered and just only used my isa allowance but then thats seriously going to limit me.

Which? ERI? Excess Reportable Income. 

dunstonh

DjangoUnchained said:

dunstonh said:

I did intend to hold them for 10+ years.

That is not a great idea.  You want to be using your annual CGT allowance and potentially doing bed & ISA if you are not using the ISA allowance in full each year.

So, some activity each year would be needed.

i intend to fully use my isa allowance anyway. If the dividends are just reininvested and not taken out is ther CGT on this?

You would just be increasing your final CGT bill if you do that.   You would look to trade each year to utilise the annual CGT allowance.

DjangoUnchained

dunstonh said:

DjangoUnchained said:

dunstonh said:

I did intend to hold them for 10+ years.

That is not a great idea.  You want to be using your annual CGT allowance and potentially doing bed & ISA if you are not using the ISA allowance in full each year.

So, some activity each year would be needed.

i intend to fully use my isa allowance anyway. If the dividends are just reininvested and not taken out is ther CGT on this?

You would just be increasing your final CGT bill if you do that.   You would look to trade each year to utilise the annual CGT allowance.

My plan was just leavebit in for ten years or more ,then if I need some just sell some each year, so not getting taxed all at once if that makes sense