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  • FIRST POST
    • confusedetf
    • By confusedetf 3rd May 18, 1:14 PM
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    confusedetf
    Fidelity ETF ishares FTSE 100
    • #1
    • 3rd May 18, 1:14 PM
    Fidelity ETF ishares FTSE 100 3rd May 18 at 1:14 PM
    Am hoping someone can help with this one.
    I have received my consolidated tax voucher for 2017/18 tax year which dhows dividends paid on my Fidelity ishares core FTSE 100 ETF fund.
    As this is my first tax voucher from Fidelity and noticed that on the voucher it is shown as a foreign divided Ireland paid in sterling of course, how should I enter the dividend on my tax return?
    Should it be entered as a foreign divided on the self assessment tax return and also what are the tax implications on an ETF. I had no idea when I took out the fund that it was domiciled in Ireland. I know this means no stamp duty is payable on the purchase of shares.
    Hoping you can advise
    Many thanks
Page 1
    • bowlhead99
    • By bowlhead99 3rd May 18, 2:43 PM
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    bowlhead99
    • #2
    • 3rd May 18, 2:43 PM
    • #2
    • 3rd May 18, 2:43 PM
    It is (relatively) straightforward. Mostly you just have to report what dividends you got... but as a special measure to stop people dodging income tax by using non-UK funds that don't distribute all their profits, the twist is that the fund has agreed to be a "reporting offshore fund" which will publish a report of how much income it received but didn't pass out to investor by way of dividend during the tax year. You'll need to include that extra number in your tax return.

    It is a reporting offshore fund invested in equities so the income you get from it counts as dividends rather than interest.

    You know how much you received in your fidelity account on the various distribution dates (and have a tax voucher for it). And iShares have published a report saying how much income (if any) they received on investors behalf but didn't actually distribute. For the Core FTSE100 UCITS ETF, the figure was 0.0001 per unit for their accounting year ended 28/2/2017. It would be deemed to be distributed to you (even though you didn't physically get it, it will have just been internally reinvested) six months later, ie 31/8/17. So that's what is going to be needed to be added into your report for tax year 2017/18. If you have 2000 shares at 0.0001 per unit that's 0.2

    On the income part of your return there's box 4 for dividends received from UK companies (see notes), box 5 for other dividends received (see notes), box 6/7 for foreign dividends if the dividends are no more than 300.

    If the divs (including the excess reported income amount) are over 300 you will need to put it into the "Foreign" pages of your tax return.

    This is a separate PDF document from the basic SA100 if you're doing it on paper, or just mark on the online version that you need the Foreign pages when you are tailoring the return for your circumstances, and that section will appear. So then you can put in the dividend details from your tax voucher (plus the X shares you held multiplied by 0.0001 for excess undistributed income.

    To save this rigmarole, if you only have limited ISA allowance it can be worthwhile doing your investing in foreign domiciled funds inside your ISA and your normal easy UK funds outside your ISA. Then the question of "excess reported income" amounts on offshore funds doesn't come up, because you don't have any non-UK funds outside a tax wrapper. Generally ETFs are going to be Ireland or Luxembourg domiciled.
    Last edited by bowlhead99; 03-05-2018 at 4:56 PM. Reason: typo, 2000 X 0.0001 is 0.20 not 2.00
    • dunstonh
    • By dunstonh 3rd May 18, 3:03 PM
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    dunstonh
    • #3
    • 3rd May 18, 3:03 PM
    • #3
    • 3rd May 18, 3:03 PM
    now that bowlhead has given the answer, the next thing is to wonder what possessed you to buy a FTSE100 tracker? One of the worst indexes to track in the Western world. Awful returns and awful diversification.

    Hopefully its not the only UK element to your portfolio i.e. you have a 250 or all-share tracker as well (and hopefully its not the only fund in your portfolio, which would be even worse)
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • confusedetf
    • By confusedetf 3rd May 18, 3:33 PM
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    confusedetf
    • #4
    • 3rd May 18, 3:33 PM
    Fidelity etf ishares ftse 100
    • #4
    • 3rd May 18, 3:33 PM
    Thanks you for such a quick response bowlhead99.
    Is there a disadvantage to owning ishares FTSE 100 UCITS ETF taxwise compared with buying FTSE 100 shares which are not an ETF?
    • confusedetf
    • By confusedetf 3rd May 18, 3:46 PM
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    confusedetf
    • #5
    • 3rd May 18, 3:46 PM
    • #5
    • 3rd May 18, 3:46 PM
    To confirm, is 13776 units multiplied by 0.0001 137.76?
    Does the dividend figure received also have to be entered in Box 6/7 for foreign dividends if over 300?
    Plus get the Foreign Pages when tailoring the online tax return and enter dividend details and X shares held multiplied by 0.0001?
    Thanks in advance
    • bowlhead99
    • By bowlhead99 3rd May 18, 4:55 PM
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    bowlhead99
    • #6
    • 3rd May 18, 4:55 PM
    • #6
    • 3rd May 18, 4:55 PM
    Is there a disadvantage to owning ishares FTSE 100 UCITS ETF taxwise compared with buying FTSE 100 shares which are not an ETF?
    Originally posted by confusedetf
    Well, for a start it means you have to fill out different boxes of the tax return from what you would do with normal UK dividends, and chase around for extra information about what was allocated to you without being distributed to your or your broker. Which is a "disadvantage" from a tax perspective as I would see it, because it's causing you to do more work. However, the tax rates themselves are the same.

    In other words, in this case the particular ETF you are using is an HMRC compliant one (it has UK reporting fund status) so (unlike with some offshore funds) you don't need to pay income tax on your capital gains, you just pay normal capital gains tax on your casual gains, and you don't pay a higher rate of UK income tax on the dividends just because they're foreign, and Ireland won't have withheld any Irish tax on your distribution.

    The tax situation might be different if you were using ETFs which were not compliant with that HMRC offshore funds reporting regime, or were based in a location where they withheld foreign taxes on dividends they distributed to investors.

    As an aside, you mention now "ishares FTSE 100 UCITS ETF". There's an iShares accumulating ETF of that name which doesn't distribute income at all and the extra un-distributed income you would have needed to find out about and put into your tax return is much higher. The one you mentioned earlier was from the iShares Core range (IE0005042456) which pays out GBP dividends four times a year, right?

    To confirm, is 13776 units multiplied by 0.0001 137.76?
    Originally posted by confusedetf
    No, it's about 1.38.

    Sorry for any confusion, in my original post I meant 2000 shares at 0.0001 was 0.2 not 2. Have now fixed the typo

    If you really have 13776 units/shares... they are worth about 7.50 each. Do you really have 100k worth of this fund? Or do you mean you have 13776 of the fund. No offence intended but if you were investing 100k into a single index via exchange traded funds I would have expected you to have looked into the implications a bit more. If it's a small dabble with some spare money that didn't fit into your ISA, fair enough
    Does the dividend figure received also have to be entered in Box 6/7 for foreign dividends if over 300?
    The instructions allow you to just put the numbers in those boxes if you have a small dividend value under 300. If you have a bigger number you can't put it in that box, you need to do the proper Foreign section
    Plus get the Foreign Pages when tailoring the online tax return and enter dividend details and X shares held multiplied by 0.0001?
    Thanks in advance
    If the number is over 300 it's too big to be allowed to be put in the main part of your return, you put it on the Foreign pages instead, not as well as.

    Just read the instructions.
    Last edited by bowlhead99; 03-05-2018 at 4:58 PM.
    • confusedetf
    • By confusedetf 4th May 18, 5:26 AM
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    confusedetf
    • #7
    • 4th May 18, 5:26 AM
    Etf ishares ftse 100
    • #7
    • 4th May 18, 5:26 AM
    Thank you so much for all the help and information.
    It is a bit of a minefield out there!!
    Once again many thanks
    • AnotherJoe
    • By AnotherJoe 4th May 18, 8:41 AM
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    AnotherJoe
    • #8
    • 4th May 18, 8:41 AM
    • #8
    • 4th May 18, 8:41 AM
    Like Dunston, I'm more bemused by the fact you have a FTSE100 investment, than the minutea of its tax treatment. It's like discussing if you should burn your money by setting fire to 20 notes or fivers.
    Last edited by AnotherJoe; 04-05-2018 at 1:25 PM.
    • confusedetf
    • By confusedetf 11th May 18, 4:03 PM
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    confusedetf
    • #9
    • 11th May 18, 4:03 PM
    ETF Dividends and Capital Gains
    • #9
    • 11th May 18, 4:03 PM
    Thank you for all the information you gave with regard to my questions on ETF's.
    I understand the paper SA106 Foreign Supplementary Page form differs from the online SA106 version. Does that mean there are different layouts for entering dividends received plus excess undistributed income? If there was a gain when selling any of the units on the ETF, this too would have to be entered on the SA106?
    I understand the ETF I have has UK reporting fund status so normal capital gains tax on any casual gains applies and I don't have to pay a higher rate of UK income tax on the dividends because they are foreign. The ETF Fund as mentioned earlier is domiciled in Ireland.
    I know the capital gains tax allowance is 11100 and the tax allowance for dividends is 2000 for the 2018/19 tax year.
    Your thoughts would be appreciated.
    Thanks
    • ColdIron
    • By ColdIron 11th May 18, 4:07 PM
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    ColdIron
    Capital Gains allowance is 11,700 for 2018/19
    • confusedetf
    • By confusedetf 12th May 18, 10:47 AM
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    confusedetf
    Many thanks....
    • bowlhead99
    • By bowlhead99 12th May 18, 11:29 AM
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    bowlhead99
    Thank you for all the information you gave with regard to my questions on ETF's.
    I understand the paper SA106 Foreign Supplementary Page form differs from the online SA106 version. Does that mean there are different layouts for entering dividends received plus excess undistributed income?
    Originally posted by confusedetf
    Without logging on to go and do a fake online tax return I don't know if the layout is different from the pdf/paper version that I could download. Doesn't really matter. The excess undistributed income which is treated as a deemed dividend in a particular tax year is added to the actual cash dividend you are reporting for that tax year to figure your tax liability. The total of the actual and deemed dividend is the dividends you declare from that stock which can just go into one box.

    If there was a gain when selling any of the units on the ETF, this too would have to be entered on the SA106?
    Your capital gains from selling assets go on the capital gains pages of the tax return.

    The only reason you would mention gains on the Foreign pages would be if you had paid foreign capital gains taxes on some of the gains you are putting on the capital gains pages, and wanted to claim foreign tax credit relief. When you used your UK fund platform to sell an ETF for more than you paid for it (which happened to be an Irish ETF), you won't have paid any capital gains tax to Ireland, so there is nothing to put on the Foreign pages in respect of gains.

    I understand the ETF I have has UK reporting fund status so normal capital gains tax on any casual gains applies
    Yes, you pay normal capital gains tax on any capital gains you make on an offshore fund that has UK reporting fund status.

    FYI, 'casual gains' was my smartphone autocorrect typo for capital gains, not sure if you made the same one or just thought I was using a bit of special terminology

    I don't have to pay a higher rate of UK income tax on the dividends because they are foreign. The ETF Fund as mentioned earlier is domiciled in Ireland.
    Correct, it is just a dividend, there is no special higher rate on the total amount received (and deemed received) just because of them being foreign. But if over 300 you have to use the foreign pages.
    • confusedetf
    • By confusedetf 12th May 18, 3:34 PM
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    confusedetf
    Thank you Bowlhead99.
    Just to clarify....the dividend information received on a tax voucher should be entered on the SA106 in a certain box.
    Do you still have to work out the excess undistributed income i.e. the number of shares held multiplied by 0.0001 and enter that figure as well or not?.
    Any units sold for more than they were originally paid for would be liable for capital gains which should be entered in the capital gains form of the self assessment and not in the foreign page form SA106?
    • confusedetf
    • By confusedetf 12th May 18, 3:55 PM
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    confusedetf
    Multiplying the number of units by 0.0001 doesn't come to very much. I have 1800 units so am trying to figure out how to add the correct amount to the actual cash dividend. i.e. 0.18
    • confusedetf
    • By confusedetf 12th May 18, 4:19 PM
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    confusedetf
    Am I correct in thinking 1800 units multiplied by 0.0001 = 0.18? What is the calculation after that to be added to the cash dividend?
    • confusedetf
    • By confusedetf 12th May 18, 5:26 PM
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    confusedetf
    If you had a dividend of say hypothetically 500 or say 1000 to round figures up easily, how much would be added to the dividend when working out the excess undistributed income when multiplying the number of units/shares by 0.0001? I am having a mental blank!!
    • capital0ne
    • By capital0ne 12th May 18, 5:38 PM
    • 533 Posts
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    capital0ne
    now that bowlhead has given the answer, the next thing is to wonder what possessed you to buy a FTSE100 tracker? One of the worst indexes to track in the Western world. Awful returns and awful diversification.

    Hopefully its not the only UK element to your portfolio i.e. you have a 250 or all-share tracker as well (and hopefully its not the only fund in your portfolio, which would be even worse)
    Originally posted by dunstonh
    Absolutely correct, a FTSE100 ETF is awful, currently a typical yield is only 4%+ with a typical cost of 0.07%. Pick something else is my tip
    • bowlhead99
    • By bowlhead99 12th May 18, 6:32 PM
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    bowlhead99
    Am I correct in thinking 1800 units multiplied by 0.0001 = 0.18? What is the calculation after that to be added to the cash dividend?
    Originally posted by confusedetf
    Total dividend to report, is actual cash dividend plus deemed undistributed dividend.

    How do you add 18 pence to something? Take the something, and add 18p.

    If you had a dividend of say hypothetically 500 or say 1000 to round figures up easily, how much would be added to the dividend when working out the excess undistributed income when multiplying the number of units/shares by 0.0001? I am having a mental blank!!
    Originally posted by confusedetf
    You certainly seem to be trying to over complicate it.

    You had a certain amount of units. The fund didn't distribute all the income in made, and kept some inside the fund. The amount they retained in the fund for their accounting year to February 2017, which you still have to pay tax on as if it were actually paid to you on 31/8/17, is 0.0001 for every unit you held.

    If the number of units you have is 1800, the total amount of deemed dividend for the year is 0.18.

    So if the dividend cash you received for the tax year 6 April 2017 to 5 April 2018 was 500.00, the amount of dividend you should actually put through your tax return would be 500.18

    Which if you were doing online would probably be rounded down to 500 by the software.

    Thank you Bowlhead99.
    Just to clarify....the dividend information received on a tax voucher should be entered on the SA106 in a certain box.
    Do you still have to work out the excess undistributed income i.e. the number of shares held multiplied by 0.0001 and enter that figure as well or not?.
    Originally posted by confusedetf
    The tax voucher you got from your investment platform or stockbroker at the time of your actual cash distributions will not include the information about what income the fund made for itself during the year and didn't choose to distribute. And that excess income which was not distributed is still income that was allocated to your shares and needs to be taxed under income tax rules.

    So you'll need to add that excess undistributed income to the actual distributions of income and report one bigger number on your tax return.

    As it's an offshore fund under the reporting fund regime, the fund publishes that information in its own reports. You can go to the iShares website, look up your fund, and find the 2017 Reportable Income report within the literature section at (https://www.ishares.com/uk/individual/en/literature/tax-information/ishares-plc-reportable-income-2017-en-gb-rc-tax-information.xls) to see how much the excess undistributed income was per unit or share of the fund that you held. Then you multiply out your number of shares by the amount per unit to get the undistributed income allocated to your shareholding in total: in your case a total of 18 pence.

    Then you add the 18 pence of undistributed income to the however many pounds or hundreds of pounds or thousands of pounds that was distributed to you, and you'll have the total amount that needs to go in your tax return.
    Any units sold for more than they were originally paid for would be liable for capital gains which should be entered in the capital gains form of the self assessment and not in the foreign page form SA106?
    Yes, put them through the normal capital gains calculation along with your gains and losses from other investments. You will end up with some UK tax to pay if the net gains exceed your annual exemption and you don't have any losses from previous years.

    But you've not suffered any foreign capital gains taxes for which you're trying to claim a credit against your UK tax, so you don't have any reason to fill out the foreign tax credit relief section.
    Last edited by bowlhead99; 12-05-2018 at 6:37 PM.
    • confusedetf
    • By confusedetf 12th May 18, 6:53 PM
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    confusedetf
    bowlhead99 once again many thanks. I am so grateful for all your help and information.
    • capital0ne
    • By capital0ne 13th May 18, 2:26 PM
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    • 260 Thanks
    capital0ne
    Absolutely correct, a FTSE100 ETF is awful, currently a typical yield is only 4%+ with a typical cost of 0.07%. Pick something else is my tip
    Originally posted by capital0ne
    A FTSE100 up 81.5% over ten years - not too good I guess, invest elsewhere
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