Monthly distribution in ETF in the means of "return of capital"

Dear HMRC, If an ETF's monthly distribution is in the means of "return of capital (ROC)" instead of "ordinary dividend", will HMRC treat this distribution as which of the following? (1) capital gain / disposal of asset (2) income (3) dividend If this is treated as CGT, how shall we calculate the capital gain / loss when we sell this ETF? Using sold price - average price I bought? Thank you very much. 


Name removed admin 

Hi,

When it comes to capital gains tax (CGT), UK-domiciled ETFs are treated the same way as other investments like stocks and shares.

Gains from the sale of these ETFs are subject to CGT, provided they exceed the annual exemption limit.

Dividends and interest distributions from UK-domiciled ETFs are also subject to Income tax, with different rates depending on the investor’s tax bracket. 

Thank you.

Hi, I have hold numbers of US ETF and I do not have all the breakdown of the dividends from them. The report provided by broken just named the distribution as "dividend" and the assets I hold as "Stocks". Is it good for me to input the income as dividend? Or do I have to come up with the year report or what to check the breakdown of the distributions?

Hi Ffn,
You will need to get full details as the US may have imposed witholding tax on these.
Once you have the details, declare as foreign dividends.
Thank you.