Excess reporting income calculations - how hard?

I happily use Investengine for my ISAs.

I’m thinking about investing into IE funds for my GIA (mostly intend to park some cash into money market funds).

The one issue is that is a potential issue for me is correctly calculating excess reportable income and equalisation adjustments for my tax return. The process of finding out the number of shares held on the day before the fund reporting date, calculating the ERI, and then substracting equalisation payment seems like quite a lot of work compared to sticking funds in a instant savings bank account, at least for smallish balances.

Curious to hear about how people have found the experience and whether the Investengine custom reports are helpful here? Are there any fund providers for which finding ERI information is particularly tricky/difficult?

Thanks in advance!

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I too have been thinking about this. For now I’ve decided to use just dividend distributing funds rather than accumulation funds in my GIA which gets around the issue of notional distribution dividend tax for accumulation funds.

I was thinking about doing that too. But I don’t think it actually gets around the ERI calculation issue.

See Excess reportable income: what it is, where to find it, and what to do with it and https://intl.assets.vgdynamic.info/intl/ukpi/documents/general/ga-uk-reporting-fund-guide.pdf

It seems like ERI might be a consideration even among distributing ETFs!

It’s certainly not straightforward. E.g. I currently have a little of Vanguards VHYL with Invest Engine.

They hav their ERI here https://www.ie.vanguard/product-documentation/tax-reporting

However they don’t appear to show VHYL (or any ETFS just funds?) on the download. 2023 didnt work for me when downloading but 2022 did.

So I had a further look and found this vanguard document https://www.ie.vanguard/content/dam/intl/europe/documents/ucits/vf-plc-excess-reportable-income-uk.pdf which has ERI for VHYL with the ERI being 0. Looking around at other providers too most but not all dist ETFs appear to have 0 ERI.

Here’s another up to date vanguard doc which shows ERI https://fund-docs.vanguard.com/Vanguard_Funds_Plc_ERI_30_06_22.xlsx

For VHYL had 0 ERI but for the accumulation version does have some ERI

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Not sure if this is what you are meaning but I’m already investing into a GIA with IE as I’ve maxed my ISA and needed a place to park cash. I have a money market fund that I use to store some of my house rental income ready for my tax return. Therefore I have parked money, continued to invest and than taken some out during a tax year and have been wondering how I calculate and report this.

Having a look at the IE pre-built reports, there is a CGT report which I have just run based on the current tax year. This has given me a break down of all my investment portfolios and any profit I have made on withdraws. This I will use to complete my tax return, or at least provide to my accountant to do.

Is this what you mean?

It’s not super straightforward.
KPMG have a website KPMGreportingfunds.co.uk that have many funds’ ERI (they aim to have all), so that helps if you can’t find the detail for some funds so easily.

However, once you’ve done it once and know where to make the disclosure, it is a fairly mechanical process that will take you an hour or so each year.

My suggestion: create an excel doc with columns:

  • ETFs
  • Their year-end date (DD/MM)
  • The tax-year offset, for example if the fund is 30 April, the tax-year offset is 1 (30 October 2022 is FY23), if the fund is 30 November 2022 the tax year offset is 2 (May 30 2023 is FY24).

Then for each tax year, the following columns:

  • Year-end year (simple calc of FY minus offset)
  • Shares held at year-end
  • ERI/share
  • ERI

See this article Excess reportable income: what it is, where to find it, and what to do with it

I would LOVE it if the auto generated tax reports created by Investengine provided all the info needed to fill out a tax return.

But based on the article above and some comments, it seems very unlikely this is actually the case. We would need to manual tracking in a spreadsheet and get information either from the kpmg fund reporting website or direct from the provider.