Your annual Composite Tax Certificate (CTC) summarises the dividends and interest received from your investments.
If you have an account which is subject to Capital Gains Tax and Income Tax, we send you a CTC at the end of each tax year (in your April valuation), to help you complete your tax return. Please keep it, as it may be required by HMRC.
Your CTC will contain up to six sections, depending on your account and investments:
Mainly UK Shares and Unit Trusts (with associated tax deducted) are included.
Government stock (gilts) and other fixed interest investments such as bonds. If any tax has been deducted, it will be separately detailed. Certain unit trusts and high yield funds will also be included. Interest on any cash is shown on your account statement.
Accumulation funds retain dividends and interest within the fund, so no cash payments are made to you. These notional payments should be included in your tax return.
All investors eligible for a dividend from a unit trust receive the same total distribution per unit, however holders of ‘group 2’ units (units purchased during the latest accounting period) receive part of this payment as ‘equalisation’. The equalisation payment represents the income accumulated on the ‘group 2’ units up to the point of purchase from the previous accounting period. As this is effectively a return of part of the purchase price, it is not liable to income tax and should be deducted from the cost of your units for capital gains tax purposes.
These are normally paid after the deduction of Dividend Withholding Tax, which is deducted in the country of origin before the payment is made to us. Dividends from US shares are subject to withholding tax of up to 30%, unless you have completed a W-8BEN form.
PIDs are paid with tax deducted, currently at a rate of 20%.