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Dividend Statement Query

Practical Issues
jlend
Posts: 6
Joined: February 23rd, 2021, 8:51 pm

Dividend Statement Query

#440325

Postby jlend » September 7th, 2021, 2:04 pm

Last year I set up a GIA and purchased some units of LifeStrategy 80. This year I received dividends with I need enter into my tax return. It is set up as an income fund to simplify handling the dividends and I received an amount as cash, which I assume is the amount I enter into my Tax Return.

The Dividend Details statement I received shows figures for the following categories:

Shares Held on XD Date
Dividend Rate
Dividend Paid
Tax Rate
Tax
Gross Dividend

If I multiply 'Shares Held on XD date' by the 'Dividend Rate' I get the amount I received as cash which is what I expected. What I don't understand is the 'Dividend Paid' figure and how it relates to the previous figures. The 'Tax Rate'/'Tax' are zero because no tax has been paid yet and so the 'Gross Dividend' is the same as 'Dividend Rate'. Is anyone able to explain what 'Dividend Rate' is please?

Thanks,
J

bluedonkey
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Re: Dividend Statement Query

#440329

Postby bluedonkey » September 7th, 2021, 2:14 pm

What is a GIA?

pje16
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Re: Dividend Statement Query

#440330

Postby pje16 » September 7th, 2021, 2:16 pm

General Investment Account?

jlend
Posts: 6
Joined: February 23rd, 2021, 8:51 pm

Re: Dividend Statement Query

#440336

Postby jlend » September 7th, 2021, 2:27 pm

As pje16 said, 'General Investment Account' so outside of a Tax wrapper.

bluedonkey
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Re: Dividend Statement Query

#440342

Postby bluedonkey » September 7th, 2021, 2:53 pm

jlend wrote:Last year I set up a GIA and purchased some units of LifeStrategy 80. This year I received dividends with I need enter into my tax return. It is set up as an income fund to simplify handling the dividends and I received an amount as cash, which I assume is the amount I enter into my Tax Return.

The Dividend Details statement I received shows figures for the following categories:

Shares Held on XD Date
Dividend Rate
Dividend Paid
Tax Rate
Tax
Gross Dividend

If I multiply 'Shares Held on XD date' by the 'Dividend Rate' I get the amount I received as cash which is what I expected. What I don't understand is the 'Dividend Paid' figure and how it relates to the previous figures. The 'Tax Rate'/'Tax' are zero because no tax has been paid yet and so the 'Gross Dividend' is the same as 'Dividend Rate'. Is anyone able to explain what 'Dividend Rate' is please?

Thanks,
J

Dividend Rate per share x Number of shares = Dividend Paid.
"Tax rate" and "Tax" is a legacy item from when UK dividends had a tax credit attached. This went out years ago so can be ignored.
The dividend voucher should also give "Date Paid". It is the date of payment as shown on the dividend voucher that determines which tax year the income falls into.

All the above is based on the UK tax position for a UK tax resident.

Gengulphus
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Re: Dividend Statement Query

#440348

Postby Gengulphus » September 7th, 2021, 3:19 pm

jlend wrote:Last year I set up a GIA and purchased some units of LifeStrategy 80. This year I received dividends with I need enter into my tax return. It is set up as an income fund to simplify handling the dividends and I received an amount as cash, which I assume is the amount I enter into my Tax Return.

The Dividend Details statement I received shows figures for the following categories:

Shares Held on XD Date
Dividend Rate
Dividend Paid
Tax Rate
Tax
Gross Dividend

If I multiply 'Shares Held on XD date' by the 'Dividend Rate' I get the amount I received as cash which is what I expected. What I don't understand is the 'Dividend Paid' figure and how it relates to the previous figures. The 'Tax Rate'/'Tax' are zero because no tax has been paid yet and so the 'Gross Dividend' is the same as 'Dividend Rate'. Is anyone able to explain what 'Dividend Rate' is please?

To answer the question you've asked, 'Dividend Rate' will be the dividend declared per unit - so as you've observed, the amount you received is your number of units times the 'Dividend Rate'.

But since you said before asking the question that you don't understand the 'Dividend Paid' figure, did you actually mean to ask for an explanation of what the 'Dividend Paid' figure is, but type the wrong word into your question? If so, I can't really tell without seeing the figures, but I can make a guess: it may be a form designed for use under various different countries' tax regimes. Some countries have a 'withholding tax' on dividends, that the provider needs to send directly to the country's tax authority, so that the 'Dividend Paid' to the unitholder is less than the 'Dividend Rate' declared by the fund manager. For instance, if a country has a 20% withholding tax, the "Dividend Rate" might be £1.50 and the "Dividend Paid" £1.20, with the 30p per unit difference being sent directly to the country's tax authority.

Since the UK doesn't have a withholding tax (with the exception of PIDs paid by UK REITs, but I'm near-certain that exception wouldn't apply here), I'd expect the tax rate to be 0%, the tax to be £0 and the "Dividend Paid" and "Dividend Rate" figures to be the same if that guess is right. What you've said fits the first two points, but you haven't said whether the "Dividend Paid" and "Dividend Rate" figures are the same...

Anyway, hopefully that answers your question, but I do emphasise that it is a guessed answer!

Gengulphus

jlend
Posts: 6
Joined: February 23rd, 2021, 8:51 pm

Re: Dividend Statement Query

#440519

Postby jlend » September 8th, 2021, 9:00 am

Gengulphus, sorry for the confusion, yes, I did mean say the "Gross Dividend is the same as Dividend Paid. '. Is anyone able to explain what 'Dividend Paid' is please?". The actual figures are:

Dividend Rate: 2.786527
Dividend Paid & Gross Dividend: 372.44

There are quite different. The Dividend Rate is in £ but I'm not sure about the other.


bluedonkey, the 'Record Date' is 01/04/2021 but the 'Pay Date' is 28/05/2021 and 'Issue Date' is 01/06/2021 so should this dividend apply to 2021/2022 Tax Year rather than 2020/2021?

Thanks, J

Alaric
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Re: Dividend Statement Query

#440565

Postby Alaric » September 8th, 2021, 10:57 am

jlend wrote:Dividend Rate: 2.786527
Dividend Paid & Gross Dividend: 372.44

There are quite different. The Dividend Rate is in £ but I'm not sure about the other.


Surely the Dividend Rate is that number which when multiplied by the share or unit holding gives the Dividend Paid? Possibly divided by 100 if one is in pence and the other in £.

Given that it's Vanguard, they may also have funds where the dividend per unit is expressed in US dollars or cents but the payment is in UK pounds. In which case there's a dollar sterling exchange rate in the calculation as well.

Gengulphus
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Re: Dividend Statement Query

#440603

Postby Gengulphus » September 8th, 2021, 1:08 pm

jlend wrote:... the 'Record Date' is 01/04/2021 but the 'Pay Date' is 28/05/2021 and 'Issue Date' is 01/06/2021 so should this dividend apply to 2021/2022 Tax Year rather than 2020/2021?

The 'Record Date' is to do with markets and the mechanisms for paying dividends - basically, it's the date on which the organisation that keeps the register of who owns the units checks that register to determine who to send the dividends to. It's generally shortly after the 'ex-dividend date' (*) to allow for settlement - i.e. the administrative delay between a trade being agreed and the register & cash balances being updated. And the 'ex-dividend date' is the first day on which the shares are traded at a price that does not include the right to receive the dividend - the whole system is set up to try to ensure as far as possible that when securities are traded before the 'ex-dividend date', the new owner gets sent the dividend, and when they're traded on or after the 'ex-dividend date', the previous owner gets sent the dividend. ("As far as possible" because it is possible to trade on non-standard settlement - but if you do, expect dividends you receive but are not entitled to to be claimed back from you. So best avoided if you don't want complications!)

Anyway, none of that is relevant for tax: the critical date for tax is the "Pay Date", so yes, the dividend you're talking about will be taxed in the 2021/2022 tax year. And incidentally, it's the payment date declared by the company, fund manager, etc, that counts, not the date the payment lands in your account. E.g. if a company declared a dividend with a payment date of April 5th this year, but your broker's administration was a bit slow and it only appeared in your account's cash balance on April 6th, that dividend would be taxable in the 2020/2021 tax year.

I don't know what the 'Issue Date' is, but would guess that it's just the date on which the provider issued the 'Dividend Details' statement you received. If so, it's of no tax significance.

(*) In the case of shares, one business day after it, but the gap might be different for your fund units.

Gengulphus

jlend
Posts: 6
Joined: February 23rd, 2021, 8:51 pm

Re: Dividend Statement Query

#440611

Postby jlend » September 8th, 2021, 1:30 pm

Gengulphus Yes, it looks like the Issue Date was the date the dividend pay out arrived in my account. I better make a note to put this on next year's tax return!

Thank you for your help,

J


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