The Lemon Fool

Trying to get my head round whether or not isa investors buying ishares iukp are at a tax disadvantage compared to those holding the underlying REITs
I suppose it depends on whether or not the underlying REITs make an exception when paying distributions to funds as opposed to individuals? I shares themselves don't withhold any tax and pay out whatever they receive.
grateful for any comments that might illuminate the matter .

Thanks
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Hmmm....well, I don't know the answer, however section 7 of S.I. 2006/2867 The Real Estate Investment Trusts (Assessment and Recovery of Tax) Regulations 2006 seems to be the bit of the legislation that deals with who can received PIDs gross, and AFAICS there's nothing there that allows an Irish domiciled ETF, like IUKP, to do so -- unless possibly iShares qualifies under section 7(2)(b)

colin wrote:I suppose it depends on whether or not the underlying REITs make an exception when paying distributions to funds opposed to individuals? I shares themselves don't withhold any tax and pay out whatever they receive.
grateful for any comments that might illuminate the matter .

It's not uncommon for ISA (and SIPP) investors to receive net distributions from REITs. It depends whether the custodian has segregated gross investors from net investors.

If tax is withheld from an ISA investor, there should be a refund. That is demonstrated in practice that if you hold a Corporate Bond in an ISA, you get the net distribution, shortly followed by the tax refund.

Well my guess would be that the issue has not yet been looked at by HMRC/uk govt, there seems to be no reference to offshore funds receiving and distributing pids-paifs and there is no reference to such distributions on the ishares website, certainly my distributions are classed as foreign dividends only. It may be similar to the situation that prevailed to ishares bond funds before the authorities twigged that they were paying out interest as untaxed dividends, perhaps ? But anyway thanks for your comments. Much appreciated.
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