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Excess Reportable Income for Accumulating Funds

Index tracking funds and ETFs
GeoffF100
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Excess Reportable Income for Accumulating Funds

#467982

Postby GeoffF100 » December 22nd, 2021, 10:19 am

Here is the Vanguard UK Fund Reporting Status for the last tax year:

https://www.vanguardinvestor.co.uk/cont ... e-2020.pdf

The accumulating version of the Vanguard All-World ETF VWRP has an Excess Reportable Income of 1.3843. The income version VWRL has distributions of 0.4160, 0.2973, 0.4083 and 0.3812 with an Excess Reportable Income of 0.1147. That is total of 1.6175. Can anyone explain the difference between that total and the Excess Reportable Income for the accumulating version?

Hariseldon58
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Re: Excess Reportable Income for Accumulating Funds

#468845

Postby Hariseldon58 » December 28th, 2021, 5:02 pm

I think you have the wrong link.

In addition the accumulating version has a lower absolute share price than the disturbing version ie its smaller proportionally than the distrusting version.
Note the tax year is different for these ETFs as opposed to the Funds.( VWRP is an ETF )

https://fund-docs.vanguard.com/TaxdocumentDec2021.pdf

VWRP eri 1.5567
VWRL is 1.69

About half of the difference is the relative size, the other half of the difference is probably the timing of dividend payments.Hope this helps.

1nvest
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Re: Excess Reportable Income for Accumulating Funds

#468941

Postby 1nvest » December 29th, 2021, 9:09 am

Outside of ISA/SIPP and such calculations along with figuring out how much was withheld as dividend withholding taxes across many countries (broadly around 20% average), and how much the cost per share should be increased to account for taxes already paid (to avoid double taxation when capital gains are being calculated) ... is pretty much beyond being reasonable/simple IMO.

Question : Do the same excess reportable income factors also apply to Investment Trusts such as FCIT? I suspect not, being UK domiciled compared to world stock tracker ETF's being offshore (such as Ireland).

Also - what are the likely changes now Brexit has occurred. Can't see EU (Ireland) permitting non-EU (UK) continuing to not have EU dividend withholding taxes exempted mid/longer term. A tendency to deviate away from current arrangements type risk?

GeoffF100
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Re: Excess Reportable Income for Accumulating Funds

#468944

Postby GeoffF100 » December 29th, 2021, 9:19 am

Here is the link that I intended:

https://global.vanguard.com/documents/i ... e-2020.pdf

Thank you for your link, which is relevant to this tax year. Vanguard has not been so quick at publishing the ERI in previous years. I did not engage my brain properly. You are right. I have to take account of the differing NAVs when the dividends are paid. I will have a careful look when I have time.

GeoffF100
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Re: Excess Reportable Income for Accumulating Funds

#468946

Postby GeoffF100 » December 29th, 2021, 9:27 am

1nvest wrote:Outside of ISA/SIPP and such calculations along with figuring out how much was withheld as dividend withholding taxes across many countries (broadly around 20% average), and how much the cost per share should be increased to account for taxes already paid (to avoid double taxation when capital gains are being calculated) ... is pretty much beyond being reasonable/simple IMO.

Question : Do the same excess reportable income factors also apply to Investment Trusts such as FCIT? I suspect not, being UK domiciled compared to world stock tracker ETF's being offshore (such as Ireland).

Also - what are the likely changes now Brexit has occurred. Can't see EU (Ireland) permitting non-EU (UK) continuing to not have EU dividend withholding taxes exempted mid/longer term. A tendency to deviate away from current arrangements type risk?

Excess reportable income applies to foreign domiciled funds that have reporting status. Brexit is not relevant to withholding taxes. They are set nationally, and there are tax treaties between nations.

GeoffF100
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Re: Excess Reportable Income for Accumulating Funds

#469185

Postby GeoffF100 » December 30th, 2021, 2:23 pm

I have a had a closer look at VWRL and VWRP for the current tax year.

https://fund-docs.vanguard.com/TaxdocumentDec2021.pdf

Account period: 1 July 2020 to 30 June 2021
Fund distribution date: 31 December 2021

VWRL Opening Price on 1 July 2020 = 69.86 (from the FT). The income distributions are:

0.4546 24/09/2020
0.3128 17/12/2020
0.3380 18/03/2021
0.5812 17/06/2021

0.0023 30/12/21 ERI

Total = 1.6889

VWRP Opening Price on 1 July 2020 = 65.21 (from the FT)

1.5567 31/12/21 ERI

Normalising this to the starting share price of VWRL gives 1.5567 * 69.86 / 65.21 = 1.6677

We would be paying about 1.3% more tax on VWRL than we would be on VWRP, if there were no currency conversion costs. With iWeb, the tax bill would actually be about the same because we would lose 1.5% on converting USD to GBP, but that is no consolation. I do not know whether the accumulating version is always favoured, but I suspect that it is.


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