Overview
With effect from 6 April 2016, UK dividends no longer have any tax credits attached to them. What changes have been made to Troika to help users with processing such income?
Amendments to Troika
Troika allows investment income to be posted gross or net of tax, allowing for the notional UK 10% Tax credit. If the rate were 10%, and the net dividend received was £90, a Troika user would post this amount and Troika would automatically post what was received in the bank (the gross dividend of £100 and a tax credit of £11.11).
As the UK Dividend Tax Credit ceased from April 2016, it will become necessary to flag some investment income within Troika as paid gross, where it used to be paid net. The rates of investment income tax are controlled using the Investment Types in the Utilities module and this is still the case to allow users maximum flexibility across many different types of investment.
An additional option has been added to assist with changing the investment income paid gross/net flag for all investments held on a selected client. If some investment income is still paid net, this can be flagged accordingly within the same portfolio.
Dividend Batches
If the investment holdings for a single client or a group of clients are up-to-date, the dividend batch function is a useful option to bulk process income. Users have always been able to flag the investment income/dividends history as ‘Gross’ or ‘Net’ and the Dividend Batches menu option continues to process income based on this flag. Some users populate this field automatically with an external dividend feed, or maintain these records manually. Enter ‘G’ or ‘N’ in the Gross/Net field in the Income tab for each individual investment, where batches of income are to be posted.
Singular transactions, entered in 'Transactions - Add'
To post singular investment income transactions using the menu option Transactions – Add, each investment ledger must have the flag ‘income paid gross’, configured. This flag was originally set individually for every investment ledger, and only appeared when editing each investment ledger.
An option has been added to the investment ledger screen to set this flag for all investments for a selected client to either ‘All Income Paid Gross’ or not. Select the ‘All Income Paid Gross’ checkbox and confirm ‘Yes’. All future investment income transactions made to this client will default to gross calculations but can still be edited before posting the transaction.
Portfolios where not all income is received gross
If some investment income is still received net, marking a client as receiving income gross is the most efficient method of managing the changes, and then individual investment ledgers can be still flagged as receiving income net. Select the Investment Ledgers you wish to flag as being received net, and then access the ledger details screen. Untick the ledger ‘Income Paid Gross’ checkbox found beneath the ‘Default Settings’ button:
This article is confirmed to be applicable from Troika release 2.08.025.