Reinvested dividends

I have held foreign shares in Walmart for a number of years now. These were acquired via an Asda sharesave scheme. When the plans matured I elected to keep the shares in the designated service computershare. As part of being in the Asda plan computershare reinvest the dividends. There is no option to take a cash dividend due to being part of the Asda plan. Approximately 4 times a year the dividend is awarded but taxed at 15% under the treaty. The amount after tax is then used to purchase an amount of shares to add to my holding. My initial question is if these dividends are only taxable under CGT when I sell them, how much do I state as acquisition cost. Is it the net dividend amount used to purchase them and do I add these amounts to my 104 holding of the same shares? So in example. I have 10 shares in Walmart at an acquisition cost of $700. My 104 holding is now created. I later receive a dividend of $100 which is US taxed $15 giving a net of $85. $85 is automatically reinvested to buy 0.7 shares. Do I now add these 0.7 shares to my 104 holding like this; 10 shares + 0.7 shares = 10.7 shares Pool of cost $700 + $ 85 = $785? if this is correct so far are, HMRC satisfied that I don't owe any other UK taxes on the dividend other than capital gains when I sell. I ask this as it feels like I've been paid a dividend? I've read in detail the HMRC website regarding reinvested dividends and just cannot get my head around the wording Thank you so much in advance

Hi,
Please have a look at the examples of S104 holidngs and HS284 Shares and Capital Gains Tax (2023)
The pool of allowable cost is adjusted each time an ‘operative event’ occurs.
An operative event is anything which reduces or increases the value of the pool of cost.
Purchases and sales of shares are the most common examples of operative events.
Thankyou.

I appreciate this is an old discussion but I have the same question and the links provided by HMRC Admin 8 do not seem to give me a solution. I have shares in a US company held Computershare and dividends are reinvested. When a dividend is paid, 15% US tax is subtracted along with a small fee. When I adjust my section 104 pool of actual cost I know I can claim the fee as an expense so I would add the dividend paid minus the fee to the pool. Can I also claim the US tax as an expense, therefore the amount added to the pool will be dividend minus US tax paid minus fee? Also, as per the original poster, is income tax payable on that reinvested dividend? I know capital gains needs to be calculated when shares are sold but for this calculation a correct pool of actual cost is needed. Hence the question. Many thanks.

Hi dave59,
The foreign tax deducted would be claimed as foreign tax credit relief if applicable and not as an expense.
The fee is not allowable.
For reinvested dividends, you only declare this if reinvested by you.
If reinvested automatically by the company then no,
Thank you. 


 

I too appreciate this is an older discussion but I have a similar but slightly different question please. I hold shares in a US company through Computershare, all of which were obtained through SAYE schemes many, many years ago. All dividends have been reinvested, albeit I am not under any obligation to reinvest them. Based on your reply to the previous query above, where you state that if the company automatically reinvests the dividend there is no requirement to declare them for income tax, am I wrong to have submitted the monetary value of last year's dividends on my tax return? Thank you in advance for your advices.

Hi,

No as it is you who has made the reinvestment at your choice.

Thank you.