Allowable expenses for dividends across the tax year - how to file the SA?

Hi, I have a question regarding allowable expenses for capital gains for securities such as shares. Assume the following example transactions: BUY 1/1/2022 FOO 10 10 0 SELL 1/3/2022 FOO 5 10 0 DIVIDEND 2/3/2022 FOO 5 5 BUY 3/3/2022 FOO 5 10 0 DIVIDEND 1/12/2022 FOO 10 10 Here you've got a dividend that does match with the shares bought in the acquisition on 3rd March. And so you would assume you account for that by having allowable expenses of £5 on the disposal on 1st March. But you'll notice there you've gone across a tax year. So if you did the tax return before you received that dividend on 1st May, you would not account for that dividend and then would do it later. Or even, you could have more and more dividends coming in for those shares in perpetuity which surely would have to be accounted for on that B&B'd disposal. Options I can see: Indeed the dividends that come in after keep changing the disposal on 1st March 2022's allowable expenses. However since DIVIDEND 1/12/2022 happened after the 2021/2022 tax year end, it cannot enter the 21/22 tax return but rather need to be accounted for in the 22/23 tax return? Will this be a manual adjustment of the 21/22 tax return? Please can you advise how to deal with these cross-tax year edge cases?

Hi,

The dividends payment is not a deduction for capital gains and you will declare the dividends seprately. These should be shown in the tax year in which they are paid to you.

The Capital Gain only allows for the purchase cost in his respect as an allowable cost and not any dividends paid out in the interim period. Selling costs would then also be deductable.

Thank you.

Hi, thanks for your reply. Apologies please consider "Deemed Distributions" in lieu of "DIVIDENDS" in my early message. This applies for example to Accumulating units UCITS that are Reporting to HMRC; their dividends is not paid out but divided tax is owed on the "deemed dividends". BUY 1/1/2022 FOO 10 10 0 SELL 1/3/2022 FOO 5 10 0 DEEMED DISTRIBUTION 2/3/2022 FOO 5 5 BUY 3/3/2022 FOO 5 10 0 DEEMED DISTRIBUTION 1/12/2022 FOO 10 10 Here you've got a deemed distribution that does match with the shares bought in the acquisition on 3rd March. And so you would assume you account for that by having allowable expenses of £5 on the disposal on 1st March. But you'll notice there you've gone across a tax year. So if you did the tax return before you received that deemed distribution on 1st May, you would not account for that deemed distribution and then would do it later. Or even, you could have more and more deemed distribution coming in for those shares in perpetuity which surely would have to be accounted for on that B&B'd disposal. Options I can see: Indeed the deemed distribution that come in after keep changing the disposal on 1st March 2022's allowable expenses. However since DEEMED DISTRIBUTION 1/12/2022 happened after the 2021/2022 tax year end, it cannot enter the 21/22 tax return but rather need to be accounted for in the 22/23 tax return? Will this be a manual adjustment of the 21/22 tax return? Please can you advise how to deal with these cross-tax year edge cases? * Many Thanks

Hi,

A deemed distribution will be treated as a taxable dividend. This is deemed to be received on the fund distribution date. You have until 31 October each year to submit a paper tax return and 31 January the following year for an online return.  

Box 20, page 8 on SA100 and its online equivalent can be ticked where provisional figures have been reported.  

It is possible to amend tax returns once they are submitted, either in writing to HM revenue and customs BX9 1AS, detailing the required changes or by amending the online version. 

Thank you.