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bigduckontax
bigduckontax, Accountant
Category: Tax
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tax and eventually (on disposal) gains

Customer Question

For income tax and eventually (on disposal) for capital gains tax I would like to be able to calculate the notional distributions I will have received since 2011 on the Accumulation Units which I hold in Unit Trusts and OEICs.
Can you advise me firstly if there is any website which would list historic dividend amounts and secondly how I then make the calculations?
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I'm Keith and happy to help you with your question.
Unfortunately you are liable to income tax on accumulated distributions in unit trusts and OEICS unless these holdings are in some form of tax free envelope eg an ISA. You therefore have income which you would appear not to advised HMRC and you should rectify this deficiency immediately'
Here is a web site which will give you guidance:
http://monevator.com/income-tax-on-accumulation-unit/
The Unit Trusts and OEICs will have a provider who can advise you of the accumulations.
Here is Incademy's advice:
'The taxation of unit trusts and OEICs is identical as far as the investor is concerned.
•Investors are liable for income tax on dividend and interest distributions
•Investors are liable for Capital Gains Tax on realised gains, subject to normal allowances
Income is normally distributed from unit trusts and OEICs on set dates in the year, and usually the interim and final distributions are spaced 6 months apart. However, where the distribution is normally very small (e.g. on growth funds) it may be paid in one instalment. Other funds (e.g. specialist funds) may not make distributions at all.'
An income distribution from an equity fund is called a dividend. A distribution from a non-equity fund (e.g. gilt and corporate bond funds) is sometimes referred to as the coupon.
I am so sorry to have to rain on your parade.
Customer: replied 1 year ago.

Thank-you for this.

Unfortunately I have been advised that like Boris Johnson I am what they call an "Accidental American" someone who was born there but never lived there etc. etc. I am supposed to be able to tell the American taxman what the notional distributions have been on my ISA, which they tax, but of course I have absolutely no idea how to calculate them.

By the provider I suppose you mean a company like M & G (for their Recovery Fund). But I would still be not sure once I get the dividend amount from, e.g. M & G, how to come up with a figure of what the notional distribution would be on my particular sum invested.

For instance if I had invested £10,000 and the dividend on the accumulation fund was shown as 1.715p (not real figures), what do I do, multiply or divide or what?!

Expert:  bigduckontax replied 1 year ago.

May I make a suggestion. I spent so much time in the States the other year that I came within the IRS radar. I was telephoned and advised the IRS that I was UK domiciled and paid all my taxes within the UK. The official thanked me and told me I would not be further troubled and I haven't. Why not adopt that line with the IRS if they call?

M&G Recovery Fund will provide you with the actual dividend distributed if you ask them, indeed it may well be on their web site. You just multiply the rate by your holding for the answer. Don't forget that it will have been subject to the notional 10% tax rate anyway so you probably do not have any additional liability. Dividends from the Recovery Fund are, in my experience, small beer anyway!

Please be so kind as to rate me before you leave the Just Answer site.

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Customer: replied 1 year ago.

That bit about the notional 10% tax rate having been deducted is very useful, but does that really apply to a tax-free ISA? I would be grateful if you can tell me on this, it could save me quite a bit of money.

My sister would agree with you, but apparently I can renounce (expatriation!) my American ciitizenship after 5 years tax returns have been paid up! Unexpected tax demands on UK pensioners can kill with heart attacks or strokes following on, and basically I am inclined to pay up and to get it "sorted". I think the benefit of not having been born there and become an accidental American citizen is worth a lot to you and others.

Incidentally it was only by reading about Boris in the papers before Christmas that I realised that these horrors must apply to me likewise, although Boris has now actually gone and got a US passport. Is he planning to run as Mayor of New York? In yesterdays' papers he said he was going to pay up this week, over £100,000.

Grateful for a reply on my first point.

Expert:  bigduckontax replied 1 year ago.
There is no tax deduction, notional or otherwise, on an ISA. An ISA is tax free and should not be declared on you annual self assessment tax return. There is no requirement to disclose it to the tax man at all.
Boris won't pay tax twice anyway as under the Double Taxation Treaty between the UK and the States he only has a tax liability in one jurisdiction for one particular income stream.
You won't get questioned by the IRS in any event unless you visit the USA for the normal period to become liable which I think you will find is the standard 91 days.
Expert:  bigduckontax replied 1 year ago.
Thank you for your support.

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