Henderson Far East Income (HFEL) - Tax Status?

[BBLSP1]

My IWeb 2017/18 Tax Certificate lists Henderson Far East Income IT (HFEL) as a UK equity for the first three dividend payments on 31 May 2017, 31 Aug 2017 and 30 Nov 2017, but lists it as as a non-UK equity for the final dividend payment on 28 Feb 2018. (For all dividend payments received in tax year 2016/17 HFEL was listed as a non-UK equity.)

Is this correct? Was HFEL a non-UK equity in 2016/17 and then a UK equity for the first three dividend payments of 2017/18 and then revert to a non-UK equity for the final payment? Or, as I suspect, should HFEL in fact have been recorded as a non-UK equity for all payments in 2017/18?

Appreciate if anyone else holding HFEL or in the know could comment.

[SalvorHardin]

Henderson Far East Income has been a Jersey company since 2007 (see page 7 of the 2017 annual report - website linked below).

The brokers have made an error; all of its dividends have been foreign income since 2007.

I've held them for years (in certificated form) and the dividend vouchers have always said that the company is Jersey based. The Inland Revenue has never queried my treating them as foreign income.

https://www.janushenderson.com/ukpi/fun ... me-limited

[Markab01]

HFEL is domiciled in Jersey and is therefore classed as foreign for dividend purposes.

I think that it has always been domiciled in Jersey and I do not remember any changes over the number of years that I have held it.

I only hold in my ISA and SIPP so do not receive tax certificates relating to dividends but I would ask for an explanation from iWeb as I suspect that they have made a mistake for the first three dividend payments of 2017/ 2018 tax year.

Markab01

[BBLSP1]

Many thanks SH.

Yes, that's how I understand it.

However, on speaking with IWeb, they thought the other way - i.e. all the dividend payments should have been classed as UK equity! They are going to look into it and respond to me.

Any other IWeb HFEL holders out there and what did your tax certificate say?

[richfool]

Hargreaves Lansdown, Citywire and HFEL's KIT all show it as (still) domiciled in Jersey.

I don't hold HFEL.

[monabri]

If held in an ISA, would one need to declare it as " foreign income" via a tax return?

[Alaric]

If held in an ISA, would one need to declare it as " foreign income" via a tax return?

Nothing held in an ISA is declared on a Tax Return. That's one of the points of them.

[nmdhqbc]

Any other IWeb HFEL holders out there and what did your tax certificate say?

Finally got round to downloading my tax cert. Yep, they've made the same mistake with mine. I'll call them on Monday.

[Steveam]

III (formerly TDW) show HFEL as foreign income.

Best wishes,

Steve

[BBLSP1]

Finally got round to downloading my tax cert. Yep, they've made the same mistake with mine. I'll call them on Monday.

Let me/us know if you have any luck. They were going to get back to me on it, but so far, so quiet.

[BBLSP1]

I made contact with Janus Henderson who administer HFEL and got the following reply:

Re: Tax Status of Henderson Far East Income IT (HFEL) (KMM6660457V18068L0KM)
Janus Henderson Help <HGIHELP@janushenderson.com>
Yesterday, 17:32

Dear xxxx

Thank you for your email.

Please note, the Henderson Far East Income IT has been a non–UK equity for all the years you have specified below.

If you have any questions, please call our Client Services team on 0800 832 832. If you are calling from outside the UK, please call us on +44 1268 448639. Our lines are open Monday to Friday between 9am and 5.30pm.

Kind Regards

Support@janushenderson.com


So I intend to compete my tax return on this basis and ignore the Certificate from the broker.

[nmdhqbc]

Finally got round to downloading my tax cert. Yep, they've made the same mistake with mine. I'll call them on Monday.

Let me/us know if you have any luck. They were going to get back to me on it, but so far, so quiet.

Rang iWeb yesterday. They agreed that it was a mistake and said they could send me a corrected paper tax cert straight away. They said the electric one online would be fixed at some point but could not give a specific time frame. I pushed her on that and asked if it would be fixed within 2 months and she said yes. So I told them not to bother with paper, I'd wait. Can't be doing with paper anymore.

[MDW1954]

With the abolition of tax credits etc, I thought that the distinction between foreign dividend income and UK dividend income no longer really mattered..?

I'm obviously wrong, as otherwise the posters on this thread wouldn't be saying what they are saying.

But what exactly is the distinction?

MDW1954

[SalvorHardin]

With the abolition of tax credits etc, I thought that the distinction between foreign dividend income and UK dividend income no longer really mattered..?

I'm obviously wrong, as otherwise the posters on this thread wouldn't be saying what they are saying.

But what exactly is the distinction?

MDW1954

Foreign withholding tax can be offset against your UK tax liability. Of particular interest to UK investors is the UK dividend tax.

In my case the withholding tax upon my American and Canadian dividends exceeds my UK dividend tax, so for practical purposes I ignore the dividend tax.

Also the tax return still requires you to separately list foreign and domestic income.

[XFool]

With the abolition of tax credits etc, I thought that the distinction between foreign dividend income and UK dividend income no longer really mattered..?

I'm obviously wrong, as otherwise the posters on this thread wouldn't be saying what they are saying.

But what exactly is the distinction?

It's worse than that! Even before the abolition of the Dividend Tax Credit, dividends from the likes of HFEL (following an EU ruling some years ago) were in effect treated the same way as UK shares with a Tax Credit.

It's probably (I'm guessing) something to do with if your ARE taxed by a foreign company (a witholding tax) and how much you can ask HMRC for it to be taken into account against taxes you need to pay...

[Alaric]

It's probably (I'm guessing) something to do with if your ARE taxed by a foreign company (a witholding tax) and how much you can ask HMRC for it to be taken into account against taxes you need to pay...

For a UK individual holding a Jersey based Investment Trust, I don't think there's any difference in the calculation of tax under current tax law from receiving the same income from a UK based IT. There's no Jersey withholding tax to complicate matters.

There's some good reason, possibly obsolete, why some ITs elected for a Jersey listing. I suppose if HMRC really wanted to be difficult, they could query a tax return where Jersey income was shown as UK.

[BBLSP1]

It also makes a difference, now that dividends are directly taxed, if you are non-resident and the shares are not sheltered.

Non-residents may still have to pay tax on UK equities (depending on circumstances, there was a thread on this recently), but not on non-UK equities.

[TahiPanasDua]

It also makes a difference, now that dividends are directly taxed, if you are non-resident and the shares are not sheltered.

Non-residents may still have to pay tax on UK equities (depending on circumstances, there was a thread on this recently), but not on non-UK equities.

The corollary of this is of great interest to me. As a recently returned long term non-resident, I will now have to declare foreign dividends for the first time.

I am assuming that as the dividends are from Hong Kong shares where there is no withholding, dividend or other taxes, I don't have to fill in the foreign dividends part of the tax return. I simply declare them as normal dividends.

Can anyone confirm that? Thanks!

[PinkDalek]

It also makes a difference, now that dividends are directly taxed, if you are non-resident and the shares are not sheltered.

Non-residents may still have to pay tax on UK equities (depending on circumstances, there was a thread on this recently), but not on non-UK equities.

The corollary of this is of great interest to me. As a recently returned long term non-resident, I will now have to declare foreign dividends for the first time.

I am assuming that as the dividends are from Hong Kong shares where there is no withholding, dividend or other taxes, I don't have to fill in the foreign dividends part of the tax return. I simply declare them as normal dividends.

Can anyone confirm that? Thanks!

Sorry but, no, can't confirm. If you are required to fill in a UK Tax Return and your foreign dividend income exceeds £300 (I'm sure it does***), then you have to complete the awful Foreign Pages:

https://assets.publishing.service.gov.u ... 6-2018.pdf
https://assets.publishing.service.gov.u ... s-2018.pdf


*** but if not, see Box 6 on Page TR 3:

https://assets.publishing.service.gov.u ... 18__1_.pdf

[MDW1954]

With the abolition of tax credits etc, I thought that the distinction between foreign dividend income and UK dividend income no longer really mattered..?

I'm obviously wrong, as otherwise the posters on this thread wouldn't be saying what they are saying.

But what exactly is the distinction?

MDW1954

Foreign withholding tax can be offset against your UK tax liability. Of particular interest to UK investors is the UK dividend tax.

In my case the withholding tax upon my American and Canadian dividends exceeds my UK dividend tax, so for practical purposes I ignore the dividend tax.

Also the tax return still requires you to separately list foreign and domestic income.

Many thanks to you and other posters. In another few years, this won't affect me, as it will all be ISA-sheltered. But in the meantime, this has been helpful. My accountant files my tax return, so I don't get involved in the dreaded foreign pages personally, but I *do* know how awful they are.

MDW1954