UK dividend taxed at 20%

Help 👋
1

Hi,

I received a UK dividend but was taxed at 20% by Freetrade.

Why? I am underneath the ÂŁ2000 per year. I do not have to even declare this to the Inland Revenue.

This is worst than the US 15%!

You’ve received a Property Income Distribution of £0.82 in your General Investment Account (GIA) for Commercial Property :tada:

Details:

Investment income type Property Income Distribution
ISIN GGxxxxxxxxx
Ex date 15/04/2021
Record date 16/04/2021
Payment date 30/04/2021
Shares held on ex date 294
Amount per share ÂŁ0.0035
Tax withheld (20%) ÂŁ0.2
Total dividend ÂŁ0.82

I have just read the Costs & Charges again, and it does not mention any withholding tax on UK company dividends.

Commercial Property GG00B4ZPCJ00

Stamp duty 0.0000% (On execution)
One-off charges 0.0000%
Ongoing charges 2.4316%
Transaction costs 0.1082%
Incidental costs 0.0000%
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2

And every time I try to contact their support chat they always tell me I have to contact them by email, which is nothing new since I joined. Email sent


If they tax me at 20% then it’s time to bail. It’s more than the basic rate I could pay on salary.

I am livid.

3

It’s the difference between property distributions and dividend. It’s called PID dividend.

As always, I encourage you to google before posting. Become self-sufficient instead of asking basic questions. It’s quite fulfilling :wink:

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5

It’s a legal requirement. Every broker will take the 20% from REITs. But good luck on your endeavours.

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6

It’s not hidden, freetrade can’t advise you of your own tax requirements, unfortunately that’s up to you to ensure you’re aware of.

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7

It did not say REIT.

Does this 20% cover US REITs?

8

Your original post shows property income from GG00B4ZPCJ00 which is a UK based REIT from HMRC point of view, which HMRC taxes at 20%.

I don’t know where in the world GG00B4ZPCJ00 holds its properties, but that does not matter to HMRC.

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9

Property income is not a dividend, this is the same income as renting out a house. This is taxed differently. UK REITs must withold basic tax rate of 20%. And if you are on a higher tax rate you will be charged more tax when you report it on the self assessment.

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10

You don’t seem to be aware of what you’ve bought. Profits paid out from UK REITs via PID are taxable profits.

It’s easy to not know this when starting out, but it’s not Freetrades job to figure that out for you. You don’t pay them for that.

You will be taxed on any UK REIT that distributes profits via PIDs, it doesn’t matter if you hold them with freetrade or someone else

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11

OK. I shall divest my money in the property trust. Best not to use these for a dividend income. Tax is too high for me.

12

No, US REITs don’t withhold it.
It doesn’t say REIT, but investing is challenging. You need to really research things if you don’t want to go the full vanilla etf way.

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13

Thank-you. Then a US REIT will be 15% like the other US divs, won’t it?

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14

Very likely I will for some. Far less stressful and a little likely to lose all my capital.

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15

Yep :+1:

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16

I’ve never invested in US REITs but according to a Google search US REITs withhold 30% tax.

A 20% tax on property income is not bad though, real estate diversification is quite important imo.

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17

Not an imminent threat but I wonder how this could effect the future housing markets.

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18

As someone investing in US REIT, I can tell you it’s a 15% deduction.

I suggest googling: “us reit uk tax”.

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19

Yes, but I understood that this is reduced by 15% through the W8BEN form, isn’t it?

20

Land is the expensive part. You can build anything on it.

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21

I guess you don’t call in too many builders :joy: yes land can be expensive but the cost of building is also very high, whilst skills are in short supply if you read the article. There are lots of cheap bits of land around in the right areas and maybe new villages/cities could pop up there like below.

A big factor is also the time developments take to build so this really could be a game changer in many ways!