BANG! HAW-HAW!! CONSPIRACY!!! (Nov chatty)

Patience · Post by **Patience** » Wed Nov 29, 2023 8:29 pm

Thanks OC. Like everything the allowable dividend that can be earned before tax is due is steadily reducing.

6 April 2023 to 5 April 2024 Is £1,000
Year before it was £2,000

Next tax year it’s £500!

If you earn over £10k you need to complete a self assessment.

You can chose to reinvest your dividend directly into buying more shares. There is currently a family debate on whether this is taxable or not.

Wildrover · Post by **Wildrover** » Wed Nov 29, 2023 11:39 pm

It would appear no tax is liable if the dividends are reinvested to buy more shares - https://community.hmrc.gov.uk/customerf ... e%20shares.

OurCreature · Post by **OurCreature** » Thu Nov 30, 2023 12:16 am

6 April 2023 to 5 April 2024 Is £1,000
Year before it was £2,000

Next tax year it’s £500!

When HMG announced that these changes would be made 2 or 3 years ago I decided to take action and move the shares that were outside the ISA into the ISA, the shares with the highest dividends being moved first; when I started my dividend income outside the ISA was around £950 a year. Now it is around £480 a year but I have another share to part move before the end of the current tax year and that will pull it down to £375 a year. The plan is to keep doing this until all the shares are in the ISA. I'm keeping an eye on the capital gains side of it as well to make sure I don't breach those limits.

Furby · Post by **Furby** » Thu Nov 30, 2023 9:24 am

I thought about an ISA few years back but mine are all pieces of paper from the 80 and 90s and banks don't do that anymore so I decided to keep for the dividends and has been most helpful when my savings let me down paying pittances and everything was under the limits anyway until recent drop in thresholds.

Some of mine were from my work as profit sharing (before they turned evil) and script dividends 1 or 2 a year. We were told those shares were taxable as though you had been given the cash but only for higher rate taxpayers ( before 2016).

The EU was going to rip up everyone's paper shares in 2020 but because of Brexit and or COVID I still have them.

Patience · Post by **Patience** » Thu Nov 30, 2023 11:34 am

Wildrover wrote: ↑Wed Nov 29, 2023 11:39 pm It would appear no tax is liable if the dividends are reinvested to buy more shares - https://community.hmrc.gov.uk/customerf ... e%20shares.

That is interesting @WR.
I wonder if the devil is in the detail and this only applies to Mutual Funds, whatever that is.

Furby · Post by **Furby** » Fri Dec 01, 2023 8:43 am

Very interesting indeed but exact opposite of what I was told in 1992. The linked forum is a official HMRC one though so more likely true than just anyone said so but as mentioned staff there now might not know their complicated jobs either. I don't know what mutual funds even are.

The office of tax simplification has been abolished so is unlikely to get simpler any time soon. The direction does seem to be making it so complicated everyone has to do self assessment I hope to resist as long as possible. One article did say the savings dividends allowances bodmas system is too complex for a computer program.

Wildrover · Post by **Wildrover** » Fri Dec 01, 2023 10:27 am

A mutual fund means a fund that many people invest in rather than just you. For example Fundsmith that I invest in is a mutual fund - thousands of people buy shares in the fund and the fund managers invest that money in around 30 different companies. Vanguard and Fidelity have loads of different funds in areas such as technology, property, Asia, etc, etc.

Patience · Post by **Patience** » Fri Dec 01, 2023 3:49 pm

Ah. My shares are in the company I work for. They could be “bought” one of 3 ways.

Buy 2 get one free - therefore getting 1/3 discount off the share price
Sharesave - invest up to £350 per month over 3 to 5 years. The price of the shares is agreed and is at a 20% discount. You agree to buy them and they are set aside for you. At the end of the agreed term you can either transfer the number of shares to your shares account, sell all or part of the shares at today’s price or if the shares have fallen in price, request your money back. You get what you paid in in cash, but no shares.
Freeshares. This forms part of the bonus and could be up to £3k in any year. They are free from NI and income tax after 5? Years.

Effectively I get all these shares at a very good discount so I would not be surprised if Income Tax was due on dividend payments. Even ones which are reinvested.