HMRC Reporting of Dividends on Self assessment

Ok Hive Mind.  I left the US when I was 21, so tax is a bit of a mystery.  I pay for my USA taxes to be done, but the UK taxes have always been "easy" via self assessment, as most of my investments were held in pension friendly wrappers.

I have just learned that my daughter's US investment performance has been strong and will need to be reported on self assessment to the HMRC as it is above the limit.  1099B is the form where the info comes from.

?  Do i report Qualified or Total Dividends to the HMRC? 
?  What is the SECTION:--   Long-Term Transactions for Which Basis Is Reported to the IRS - Report on Form 8949, Part II, with Box D checked.  --  last year this was a negative number.., not sure on this year. 


Thanks everyone!

Ok Hive Mind.  I left the US when I was 21, so tax is a bit of a mystery.  I pay for my USA taxes to be done, but the UK taxes have always been "easy" via self assessment, as most of my investments were held in pension friendly wrappers.

I have just learned that my daughter's US investment performance has been strong and will need to be reported on self assessment to the HMRC as it is above the limit.  1099B is the form where the info comes from.

?  Do i report Qualified or Total Dividends to the HMRC? 
?  What is the SECTION:--   Long-Term Transactions for Which Basis Is Reported to the IRS - Report on Form 8949, Part II, with Box D checked.  --  last year this was a negative number.., not sure on this year. 


Thanks everyone!

?  Do i report Qualified or Total Dividends to the HMRC?  - Unless the fund is listed as HMRC Reporting then you would report total dividends.  Given that it is showing 2 different figures for qualified and non-qualified then almost certainly HMRC would expect to see Total Dividends.
https://www.gov.uk/government/publications/offshore-funds-list-of-reporting-funds

?  What is the SECTION:--   Long-Term Transactions for Which Basis Is Reported to the IRS - Report on Form 8949, Part II, with Box D checked.  --  last year this was a negative number.., not sure on this year.  The US taxes long term gains at a lower rate than short term gains.  HMRC does not differentiate between short and long term gains. To report the gains or losses to HMRC you need to know the cost of shares and the date when purchased and also the cost of the shares and date when sold.  For each date you need to convert them to GBP (£) using the foreign exchange rate for that date. I use XE.com to look up historical exchange rates.  Because of the fluctuating exchange rates there could be a big difference in the gains when calculated in £s.  You can't just convert the $ gain shown on 1099 B into £s

a 1099 may help, but the UK tax year is different. Capital gains are recalculated using a share pool and spot exchange rates for each purchase & sale. If the investments are in non-reporting funds, cost would be identified using a LIFO calculation. If any of the items called capital gains are capital gains distributions, these are not taxed as capital gains by the UK.

Assuming the investment manager knows that your daughter is a UK resident, can the investment manager produce a UK tax report in addition to a 1099?

You mention strong performance of the investments, but then your questions are about dividends. Just to make sure you've got the full picture for UK taxes, HMRC taxes both dividends and capital gains (similarly to the US, but differences in the details):

HMRC taxes dividends above the dividend allowance (£2,000 for 2022/23, £1,000 for 2023/24, and £500 for 2024/25 onwards). There's no differentiation for qualified dividends, all dividends are treated the same (and no complication about reporting funds - still a dividend either way). So you'd need to report all dividends from 06Apr22 to 05Apr23 on the UK Self Asessment, converting into GBP. I use HMRC's monthly exchange rates, as a reasonable balance between looking up every individual day vs an annual average (and given the USD/GBP fluctuations last year, that annual average would hide a lot of movement). https://www.gov.uk/government/publications/hmrc-exchange-rates-for-2022-monthly

HMRC taxes capital gains above the capital gains allowance (£12,300 for 2022/23, £6,000 for 2023/24, and £3,000 for 2024/25 onwards). There's no differentiation for long or short term gains, just gains. But for funds that are NOT HMRC reporting, these are taxed at the income rate, not as capital gains. You don't mention what the investments are - if they're individual stocks, you're fine. If they're mutual funds/ETFs, need to do some digging. The official list of reporting funds is here: https://www.gov.uk/government/publications/offshore-funds-list-of-reporting-funds. A more human-readable list of common US index funds that happen to be HMRC reporting is here, but if the fund isn't on this list, it isn't a guarantee it's not reporting, particularly if it's an active fund: https://www.bogleheads.org/wiki/US_domiciled_ETFs_that_are_UK_HMRC_reporting_funds

Just like dividends, you'd report all capital gains during the UK tax year, converted into GBP.

Because of the different tax years, US 1099 forms are pretty useless for the UK. You need to do your own calculations for the UK tax year, but since there's no differentiation of qualified dividends or long vs short capital gains, it can be pretty straightforward. Where it gets complicated is calculating capital gains cost basis with multiple purchases and multiple partial sales. 1-to-1, many-to-1, or 1-to-many are all pretty easy; many-to-many is doable but much less fun. HMRC doesn't give you options like FIFO, SpecID, etc. - only one way to do it: https://www.gov.uk/government/publications/shares-and-capital-gains-tax-hs284-self-assessment-helpsheet/hs284-shares-and-capital-gains-tax-2019

Note that all the above applies only in a taxable account. If your daughter was investing within a tax wrapper recognised by HMRC (IRA, 401k, etc.), your life becomes much simpler

Thanks guys.  That is in simple English.  My financial advisor does produce a uk tax report for me which I had forgotten about as it doesn’t come until May.  I was knee deep in US taxes and panicked.  This will help when I unpack that in May.  I sorted out the bulk of this stuff three years ago when my parents died and I inherited…hence it still being new. 

HUGELY appreciate the time you all took.   Spared from the clink for another year I hope