Dividends from Mutual Funds which are reinvested as units of the fund

Hello, I have recently moved to the UK, and i have been trying to gather the treatment on a mutual fund where dividends paid are reinvested back as units in the fund. The fund would in this case would declare dividends in Singapore dollars which is then converted to the relevant number of units based on dividend date. Eg: Units held 1,000 Dividend per each unit: 0.05 SGD/Unit Dividend: SGD 50 Unit Price at Dividend Date: SGD 20 No of Units added to existing holding: 2.5 Seeking guidance on how this income should be considered for UK tax purposes. Thank you!

Hi Ashanth Muthutantri,
If the company pays out cash dividends, you will owe taxes on those payments even if you decide to reinvest the cash received.
If however, the company reinvests your dividends to purchase additional shares, you will not owe taxes until you sell those shares. 
Thank you. 

 

Thank you! This is very helpful. Just one more addition, this is an investment in a mutual fund. No cash is paid out and the dividend is directly reinvested as units of the fund. Just wanted to be sure that this would not change the position of when taxes would be due. Thank you!

Very useful!

Hi Ashanth Muthutantri,
To confirm, it will not. 
Thank you 

 

Thanks much appreciated!