Unitisation & Foreign 'Net' Dividends
Posted: March 28th, 2021, 12:42 pm
I have a SIPP ('2060') which is unitised and also a dividend growth portfolio which is treated as one portfolio even though some is in an ISA and some is not ('unwrapped').
I hold some foreign shares in the ISA: MasterCard (15% dividend tax taken off) and Kone (30%, now 35% dividend tax taken off). The dividends are paid to me net of this, already - what do the USA or Finland care about ISAs?
For UK shares in the ISA, the dividends are paid gross.
If I had UK dividends outside the ISA above the annual allowance then they would be paid gross at the time of payment but then I'd have to report them on my tax return. So my net dividends would be lower but I'd only know the full details later.
For unitisation, to date I've always recorded the net dividends received in all cases (UK dividends outside the ISA and above the limit does not apply), but I have been pondering the issue. How does this all work when comparing to indexes? It surely creates a drag as the indexes are presumably gross returns.
I guess what this all comes down to is that I will keep reporting my own, net (actual) dividends while accepting that this is a more conservative way of doing things. (My dividends from foreign shares such as MasterCard or Kone will be below the returns they contribute to an index.) It will also create some minor drag, both in terms of the level of dividend and growth of the dividend per income unit; and the value of the accumulation units, relative to the index.
Anyone else got any thoughts about this?
Best wishes
Mark.
I hold some foreign shares in the ISA: MasterCard (15% dividend tax taken off) and Kone (30%, now 35% dividend tax taken off). The dividends are paid to me net of this, already - what do the USA or Finland care about ISAs?
For UK shares in the ISA, the dividends are paid gross.
If I had UK dividends outside the ISA above the annual allowance then they would be paid gross at the time of payment but then I'd have to report them on my tax return. So my net dividends would be lower but I'd only know the full details later.
For unitisation, to date I've always recorded the net dividends received in all cases (UK dividends outside the ISA and above the limit does not apply), but I have been pondering the issue. How does this all work when comparing to indexes? It surely creates a drag as the indexes are presumably gross returns.
I guess what this all comes down to is that I will keep reporting my own, net (actual) dividends while accepting that this is a more conservative way of doing things. (My dividends from foreign shares such as MasterCard or Kone will be below the returns they contribute to an index.) It will also create some minor drag, both in terms of the level of dividend and growth of the dividend per income unit; and the value of the accumulation units, relative to the index.
Anyone else got any thoughts about this?
Best wishes
Mark.