Tax liability on automatically reinvested foreign dividends?

My wife receives dividends from a foreign fund managed by Fidelity and held in Luxembourg, which automatically reinvests the dividends to purchase additional shares in the fund. Does she need to declare this in her Self Assessment as a foreign income, or in some other tax category? At this point she has made no capital gain as she has not sold any of her fund holdings. We had thought that the income, or capital gains tax gain, or loss, declaration would only be required when selling the fund (either partially or the total fund holdings).

Hi,
Yes.  
It does not matter whether the dividend pay out in cash or re-invest in more shares, the dividend still arises and should be included in a self assessment tax return on
supplementary page SA106, where a foreign tax credit can be claimed.  
Article 10 of the Luxembourg tax treaty (Luxembourg: tax treaties) allows for a foreign tax credit of up to 15% of the foreign tax paid.
Thank you.