Julian wrote:1nvest wrote:In non taxable accounts for accumulation funds you should automatically be referencing and reporting (in your self assessment tax return) the dividend value accumulated as though it was a actual dividend amount received, and increasing your records of average cost per share for that stock (as otherwise you might end up paying more capital gains tax than you should when you sell shares).
Own 100 shares of xyz that originally cost 100p/share, and later the fund reports a 5p dividend accumulated, so you declare a £5 dividend to HMRC, and increase your per share cost base from 100p to 105p/share.
I assume this is a simple typo, or else my understanding is totally wrong, but I assume you didn't meant to type that "non" in the bit that I bolded in the first few words of your reply, i.e. it is only taxable accounts where you need to account for dividends received by an accumulation fund but not physically paid out to you whereas for holdings in ISAs or SIPPs none of the record keeping you describe is necessary for tax purposes. (I suppose that even within an accumulation trust some people might want to separate out returns from income from those from capital growth for their own performance monitoring reasons but to lazy old me that feels like masochism!).
On that accumulation thing someone already mentioned VWRL/VWRP where VWRP is simply the accumulating (as opposed to distributing, i.e. paying out the dividends) version of VWRL. It is worth doing a bit of Google searching because many of the Vanguard ETFs come in both distributing and accumulating versions and Vangard's UK site doesn't always seem very good at making it easy to find the accumulation version.
Personally I became a convert to passive investing a few years ago. I still have a lot of actively managed ITs but their performance has been underwhelming so all new investments go into passives and as I top-slice my investments every year to top up income and make full use of my ISA and post-retirement SIPP allowances my active investment pool (ITs and some HYP shares) that form the pool of candidates to sell off so that I can let my passives run untouched until that active pool is gone.
There are already a lot of passives discussed here but I'll finish by throwing in one I think lesser known one because it's fairly new but might be of interest to those wanting maximum simplicity so covering as much market as possible with a single investment. Vanguard have done this as a mutual fund for a while but fairly recently anls announced an ETF that tracks the FTSE Global All-Cap index where the key difference between it and VWRL/VWRP is that the all-cap includes some global smaller cap representation as well as the medium and large cap found in VWRL/VWRP. The tickers for those Vanguard ETFs are V3AM.L (distributing) and V3AB (accumulating).
- Julian
Thanks Julian, indeed it should have read "in taxable accounts"
