New Dividend Taxs UK

[BobbyH]

Folks here don’t think it will affect investors much. Ironically as my mum has just reached the point where she needs to sell her house to fund her care… when she invests that money it can’t all go straight into an ISA - so she’ll be paying the extra tax for a benefit she is disqualified from because it only applies to those going into care after 1st October 2023! Is it lost on folks that the tories will call an election before 2023 so they can claim now they’ve fixed social care and leave it to the next government to fix it properly. This fixing of social care was in a bill the coalition prepared which tories punted into the long grass in 2016 with a plan to pick it up 2019! The Scots and Welsh have fixed this already.

[kenny (Kenny Grant)]

If you have a large lump sum investing in an accumulating rather than an income fund should avoid any dividend taxes, so that should be an option in this case?

EDIT - this is incorrect, see the response below.

[anon51767692]

Not so. Tax is still payable on accumulation units. See Accumulation units – tax on reinvested dividends UK - Monevator

[Kiava]

Yeah I think that’s where Blackford was getting annoyed as Scotland has already increased this for its people and now they have to pay for Englands etc but we’ll they say Scotland will be getting an extra 2b extra back so… We shall see.

I think also its really unfair on those going into care like your mother and what you said should happen.

[kenny (Kenny Grant)]

ooh I wasn’t aware of that thanks. Another reason to put everything you can in a tax wrapper I guess.

[anon51767692]

You’re welcome. I think in other countries they do avoid income tax (but not capital gains tax) but, yes, as you say, in the UK keep everything tax-sheltered if you can!

[dk1]

Thanks for this, I had no idea. This is extra work because in my experience the ETF providers themselves aren’t very transparent about accumulated distributions.

[soko (the duck)]

@anon51767692

I think in other countries they do avoid income tax (but not capital gains tax)

There is no CGT in Belgium, and div tax can be offset against tax in some way.

In Gibraltar there is no capital gains tax, wealth tax, sales tax or value added tax. Import duty is payable on all items at 10%. Income tax maxes out at approx 25%.

These are not isolated cases. Although Gib is a shining example of how to reduce tax burden on your population, and raise money through other forms of taxation. Belgium income tax is circa 55%, and healthcare is expensive.

[anon51767692]

Another one to be wary of outside of a tax wrapper is ‘excess reportable income’. For example, if you had VWRL in your GIA then beyond the dividends themselves you would need to check the excess reportable income. In 2020, Vanguard declared VWRL to have $0.1147 per share of this in the preceding year to June 2020 (penultimate column of this screenshot):

[Eaglebrad (Brad Barber)]

Wow what has racism got to do with stocks and shares

[NeilB]

To avoid this going off topic let’s keep discussions to the 1.25% dividend tax.