Consolidated Tax Statement

[AndrewInDevon]

Got my first tax statement for my investment account with Interactive Investor. This shows dividends from my ITs and from my OEICs which are all accumulating class units. Even though they are Acc class I understand I need to declare them on my self-assessment return and they will be taxed, since it’s akin to receiving a dividend and then reinvesting it. No problem so far.

But the tax statement doesn’t mention my ETF funds which are also accumulation class. The same principles apply in terms of tax. One of these is a FTSE100 tracker so I imagine it must have worthwhile dividends within the ETF, but they are not visible.

So….

A) why aren’t accumulating ETFs on the Consolidated Tax Statements, with the accumulating OEICs which are?
B) where do I get the information on the ETFs to declare in my tax return?

[londoninvestor]

Your ETFs are almost certainly domiciled offshore (probably in Ireland, or maybe Luxembourg), so the analogue of the notional dividend on accumulation units is Excess Reportable Income.

Unfortunately brokers typically don't consolidate this into the tax statement for you, so you need to do a bit of tracking down with the fund managers. The Monevator article is a pretty good starting point: https://monevator.com/excess-reportable-income/

[doug2500]

You probably know this but remember to record those reinvestments as they will add to your base cost and reduce gains in the event of a sale.

[AndrewInDevon]

So both my ETFs are iShares, have UK reporting status and an Irish domain.

The last reportable income data iShares have published for these ETFs covers a reporting period of 1 Aug 2022 to 31 July 2023. I bought my shares in August 2023 so I don't think this data applies to me - I'll have to wait until iShares publish the next reporting period to July 2024 which I am guessing they will do sometime between Sep/Oct 2024....holding up my 23/24 tax return submission, which my Consolidated Tax Statement prompted me to complete (but not submit)...which is a pain.

According to the iShares s/sheet, the distribution dates are January 2024 (for the 31 July reporting year). Not sure if this has any relevance as the Monivator article says the tax liability is driven by the number of shares you hold on the last day of the reporting period. So I've got to wait until iShares publish the next reporting year.

The 'diy' tax calculation, while not difficult, is a bit of a pain and the dates ambiguous. The iShares spreadsheet alone (buried in their Literature) would put most lay investors off. For the July 2023 year it gives the income per share (eg 5.3263 for the FTSE100 ETF) but doesn't make clear the units (£ or p)...but it must be £ as this gives a yield (on my book cost) of 3.8% for the FTSE100 tracker which looks about right (and a yield of 1.5% on the S&P500 tracker...also feels right). But the fact I have to work this out myself doesn't fill me with confidence.

Maybe this is a good reason not to hold Acc ETFs outside a tax wrapper to avoid this faf. ...am loving my OEICs now - simples.

Thanks for all these pointers - every days a school day.

[londoninvestor]

So both my ETFs are iShares, have UK reporting status and an Irish domain.

The last reportable income data iShares have published for these ETFs covers a reporting period of 1 Aug 2022 to 31 July 2023. I bought my shares in August 2023 so I don't think this data applies to me - I'll have to wait until iShares publish the next reporting period to July 2024 which I am guessing they will do sometime between Sep/Oct 2024....holding up my 23/24 tax return submission, which my Consolidated Tax Statement prompted me to complete (but not submit)...which is a pain.

According to the iShares s/sheet, the distribution dates are January 2024 (for the 31 July reporting year). Not sure if this has any relevance as the Monivator article says the tax liability is driven by the number of shares you hold on the last day of the reporting period. So I've got to wait until iShares publish the next reporting year.

The income is taxable as if it were received on the distribution date. So had you held any shares on 31 July 2023, they would have generated an income deemed to arise in Jan 2024, and you would have needed to put that on your 2023/24 tax return.

The Aug 2023 - July 2024 reporting period will generate income deemed to arise in Jan 2025. That would go on your 2024/25 tax return, so no need to wait for it right now

This is similar to how an accumulation OEIC would work if it had an ex-div date of 31 July and a dividend payment date in January. Though of course with OEICs you get all the numbers on your broker statement and don't need to go hunting for them.

[AndrewInDevon]

Thanks! Makes perfect sense…trouble is I don’t have any common sense so get messed up with all these dates, past tax years, current years, ….and it will get worse now that I’ve retired.

So no tax due on my ETFs in 23/24…yay and can submit my return this morning. Just need to remember all this for 24/25.

I notice that iShares publish the data each July so I’ll look out for it.

[DrFfybes]

The 'diy' tax calculation, while not difficult, is a bit of a pain and the dates ambiguous.
[...]
Maybe this is a good reason not to hold Acc ETFs outside a tax wrapper to avoid this faf. ...am loving my OEICs now - simples.

For the ETFs you'd still have to go trough the process as Income units also have ERI, although at least with the Vanguard ones I have it has been minimal or IIRC zero last year.

With the Funds I gather there is no CGT if you swap from Acc to Inc units in the same fund, although how it works in Practice I do not know as I assume the CGT is simply deferred until later, but it does remove the need to keep records of the notional Acc fund Divi.

Also perhaps look around for equivalent UK based Tracker Funds, eg HSBC FTSE All World ISIN GB00BMJJJG09 is UK domiciled (you can see the ISIN starts with GB) so there is no ERI to worry about and matches the Vanguard ETF VWRL (which does have ERI). Of course your broker may charge different fees for holding them.

Paul

[londoninvestor]

it does remove the need to keep records of the notional Acc fund Divi.

True, although with Inc units you need to keep records of equalisation, or you'll end up underreporting your capital gains.

Is that less hassle than the notional dividends on Acc units? Probably yes if you buy one big chunk of the fund and never add to it: in that case, the only equalisation you ever have is in the first dividend period after purchase. Maybe no if you regularly buy more: then you'll have some equalisation every period and it's probably no less of a burden than keeping track of Acc dividends.