Can someone please help me to understand my dividend payment? I just had my first dividend on the platform
I had 8 shares of Visa purchased before the ex-div date of 13 February, and the dividend was $0.30 per share. After 15% US tax I should have received $8 x 0.30 x 0.85 = $2.04. I received £1.57. Now 1.57/2.04 = 0.7696 = 1/1.2994 This does not correspond to the GBP/USD exchange rate of 0.7833 on 2 March (the official pay date) or 0.7815 on 4 March (today’s date). It appears closer to the exchange rate of 0.7665 which pertained on the ex-div date of 13 February.
For my tax reporting, HMRC expects me to use the exchange rate on the payment date of 2 March (not the ex-div date). What gives? How was $2.04 converted to £1.57? Obviously, I don’t care about a few pennies less on this small payment, but want to understand if there would be a significant effect if receiving much greater values of dividends.
Would it not be helpful if the Notification were a bit more informative? Perhaps
On 02.03.20 Visa Inc (V) paid an ordinary dividend of $0.30 per share.
On 8 shares you have paid tax of £0.28 and received £1.57.
The message says “distributed $0.26 per share”. In fact, the gross amount was $0.30. So to be precise, 0.85 x 0.30 = 0.255. It can only risk confusion to have 0.255 appearing as 0.26 and without making clear this is the after tax amount.