REITs in ISAs - FreeTrade withholding tax reclaim notifications?

Hello,
I did try to search for this topic before posting but didn’t find anything related that wasn’t locked.

For REITs that you have in your ISA, it states “PIDs paid by UK REITs are subject to a 20% withholding tax… FreeTrade will reclaim the withholding tax and distribute to ISA holders approx 30-60 days after the PID is paid”.

My question is, does anyone know whether FT will notify you when they do repay you and will it appear in your Activity listing? I hope so as it will be rather difficult to keep track of if the only thing that happens is it being added to your balance.

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They do notify you as a message but it is not something that appears in your activity feed. Hopefully something that will change in the future as you’re right, without your own spreadsheet it is a nightmare to keep track of.

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Hi
Thank you so much for your answer. I actually made the assumption since I hadn’t got any replies that people didn’t know and therefore I went to FreeTrade support. Here is their reply:

Unfortunately we do not update when we have collected this payment i’m afraid and I’m also sorry to confirm that we do have a known system limitation currently where manual payments/transfers are not reflected under the Activity tab in-app. Sadly this does include all Corporate Actions events, Standing Orders Deposits and any other manual allocation of cash by Operations team.

However, to counter this, we can generate an Activity statement on an ad hoc basis with a running cash balance to confirm that dividends have been applied to your account.

We’ll just need your date of birth for this when you require a statement generated and please let me know if there’s anything else I can help you with!

Not great but we are where we are.

I did request a balance statement from 1 November 2022 to 1 January 2023 and it was a very well laid out statement and is very useful, however, I did not see any tax reclaim transactions in there. Therefore I will have a look at the January statement in February and if they do not appear there, then it will be well over 60 days for some of them and I will raise another support ticket. Hopefully this will resolve itself one way or another.

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Can take a little longer than 60 days, I asked about the tax on a PID in October and got this;

We do monthly reclaims of 6th of the month to the 5th of the next month. For any dividends received from the 6th of October to 5th of November, we madea claim on the 6th of December. HMRC will refund us by 17th of the next month - January. We will then distribute refund by end of that same month - January, so this should reach your account soon.

Hope this helps

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Thanks Rob, yes it helps a great deal. Perhaps FreeTrade ought to write that claims can take up to 90 days rather than “30-60”.

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Just in the process of shutting down my Gia REIT positions and rebuying in my ISA. Will now keep an eye on this. As mentioned above, the transfers of cash between the two accounts doesn’t show either - both things together make it difficult to keep track.

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Hey mate,

Any update on this? Did you get the withholding tax paid back in the end, as I’m in the same situation.

Tried contacting support and got -

“ We will notify you as soon as any due payments are made into your account. Thanks for your patience.

Let me know if there’s anything else

I can help with in the meantime. “

Not very helpful.

Hello,

I did have a bit of an exchange with FreeTrade support which clarified things but I did feed back to them that it could be clearer in the app. I forgot to add it to this thread so thank you for the reminder. Here is the convo:

FT:
"Distributions typically run from 6th of the first month to the 5th of the next.
HMRC typically issues refunds by the 17th of the month that follows the end of the reclaim period. Therefore we are expecting to receive the refund for this on 17th February. Once we have the funds we will distribute them to customers as soon as possible."

Me:
“Yes, that makes sense thanks. Although it may be a good idea to make it clearer in the app where it says “30-60” days as to me it reads that this will be 30 to 60 days after the original payment, whereas it actually seems to be saying 30 to 60 days after FreeTrade claims it. Re-wording would probably help to manage expectations on the parts of users.”

FT
“Thanks for your feedback on this - that’s really helpful and we’ll relay this to the wider team so that we can improve this in future.”

Did you actually get your refund?
Thanks

From freetrade reference reclaiming tax on REITs in ISAs
We do reclaim tax on PIDs in ISAs, however this is something that has been paused for the moment. We’ll be sure to let you know once this has been resumed.

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Hi
I was out and about otherwise I would have replied earlier, really sorry to hear this. Extremely poor but unfortunately this is just one, albeit an excellent, example of why I decided to turn FreeTrade from my ISA provider into my ex-ISA provider at the beginning of the 2023-24 tax year!

For the record, I ended up asking them for monthly statements as they said that the reclaims from REITs would appear there but that ended up being a saga in itself. The amounts didn’t appear in the first month, nor the second month despite them saying 30-60 days, only then did they say it may take over 90 days (so totally contrary to how they had phrased it in the app). When the refunds did appear in the statement, they were individual amounts totally unidentifiable as to which REIT or which transaction, so all you could see were a series of numbers. It was impossible to marry them up on an Excel spread sheet, not surprisingly what you were expecting and what you got didn’t tally!

When I switched to my new provider, I asked them if their process was equally convoluted because I was simply not going to bother buying REITs if that was the case. They said no, they didn’t withhold the tax in the first place. Like you said in the other thread, I don’t understand why other providers manage to do it without withholding the tax and, if they are going to withhold the tax, at least they should have the decency to reclaim it with a minimum of time and fuss and give you the ability to properly track which reclaims have been received and when!

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@Freetrade_Team your in app info is incorrect if you are now not claiming tax back. @acamp why hasnt this been communicated to all customers with Reits in Isa’s.

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By ‘paused’, I’d imagine FT means that PIDs owed will be claimed but they’ve put it on hold for now. My best guess is this has been done to deal with the transfer backlog but I may be wrong.

I don’t quite understand why this is an issue with FT but all other brokers I’ve used simply pay out the gross dividend. A fair few FT processes seem quite manual and time intensive when you’d think things like this could be easily automated nowadays.

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Someone has already said that on another provider his was automated in 2010?

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Ive been trying to get one of my missing refunds chased up (its nearly 2 months late) and noone from freetrade has told me theyve been paused. Another example of lack of communication. My isa went the same way, right out if the freetrade door. If they dont get their act together on my sipp thats off too. Shame, used to be a good platform.

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FT really needs to iron out issues like this which are uber irritating for customers.

Start-ups are supposed to improve the experience, not make it worse.

It’s ludicrous that you can’t even buy a £9bn Reit like Segro inside a Sipp on the platform.

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Totally agree. I find keeping track of everything on FreeTrade is the bane of my fiscal life. It is near impossible - even with the financial reporting tools.

I really think FT would benefit from getting the reporting and tracking of financial events right. There is nowhere that I can look at the real-time - real order events that happen in my account, nor track my cash balance live. For instance I need to leave the app to check my emails to find out which dividends have paid, because the app dumps the event on the day it was meant to paid, rather than the day it was actually paid. I get it from a tax perspective but that does not help me track what on Earth is going on in my SIPP and ISA!

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@Freetrade_Team @acamp Can someone please respond to this are Freetrade claiming the tax on the PID element of dividends and passing it onto your customers. If your not then you need to amend the statement on the reits.

Hi @Rcllondon

Apologies for the slow response. I was just trying to get to the bottom of this matter.

We’ve been reviewing our tax reclaim process for property income distributions (“PIDs”) paid into ISAs. ISA providers can receive PIDs with tax having been withheld at source. It is then up to the ISA provider or the customer to reclaim any withholding tax to receive the total amount due.

As part of our review, we identified some minor errors in the way we calculated the amount of reclaimed tax to be distributed to a small number of customers. We briefly paused reclaiming and distributing these withheld taxes while we investigated this fully and will pay out any additional sums that were due, once the review process is finalised.

Going forward we have streamlined this process so you will receive the refund within a few days of receiving the PID, where possible, rather than within the previous 30-60 day period.

I hope that clears everything up but please do let me know if there are any further questions!

Alex

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That’s great @acamp and grateful to have had some official input on this. Assume from what you’re saying that we’ll see some retrospective credits. On this point though, a major failing is the reclaimed PIDs do not show in activity feeds - is there any way to rectify this?