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IBKR ETFs and UK Reporting Funds: ERI and Tax Explained

Updated: 21/10/2026

Are your IBKR ETFs UK reporting funds? How excess reportable income is taxed, when it falls due and why a non-reporting fund turns your gain into income.

Most ETFs that UK investors hold at Interactive Brokers are offshore funds, usually domiciled in Ireland or Luxembourg. If the fund has HMRC reporting fund status, your profit on sale is a capital gain taxed at 18% or 24% after the £3,000 annual exempt amount, but you must also declare its excess reportable income each year. If it does not have that status, the whole gain is taxed as income at up to 45%.

For a reporting fund, gains on sale are ordinary capital gains, matched with the same-day, 30-day and section 104 rules, taxed at 18% or 24% for 2024/25 (from 30 October 2024) and 2025/26, with the £3,000 annual exempt amount and the usual loss relief.

For a non-reporting fund, the gain is an offshore income gain. It is taxed as income at 20%, 40% or 45%, the annual exempt amount does not apply, and capital losses from other investments cannot be set against it. Generally a fund needs to have been a reporting fund for the whole time you owned it for your gain to be treated as capital.

HMRC publishes the list of reporting funds on GOV.UK, searchable by ISIN. Most large UCITS ETFs sold to UK investors are on it. Most US-domiciled ETFs are not, which is one reason UK investors usually hold the Irish versions.

A reporting fund must tell investors each year how much income it earned compared with what it actually paid out. The difference is excess reportable income (ERI). For an accumulating ETF, which pays nothing, almost all of its income is ERI. For a distributing ETF, ERI is usually small but not always zero.

ERI is taxed as if you had received it, even though no cash reached your IBKR account. It is treated as received on the fund distribution date, six months after the end of the fund's reporting period. A fund with a period ending on 30 June 2025 has a distribution date of 31 December 2025, so its ERI belongs in your 2025/26 return.

1. List every reporting fund you held at the end of each fund's reporting period, using your IBKR Open Positions or the statement for that date.
2. Find the fund's annual report to investors on the provider's website, usually under UK reporting or tax documents. It gives ERI per share and the reporting period.
3. Multiply ERI per share by the number of shares you held at the end of the reporting period, and convert to sterling if the figure is in another currency.
4. Put it in the tax year that contains the fund distribution date.
5. Enter it on SA106 as foreign income: as dividends for equity funds, or as interest for bond funds.
6. Add the ERI to your base cost for that holding, so it is not taxed again when you sell.

You hold 400 shares of an accumulating Irish equity ETF with reporting status. Its reporting period ends on 30 June 2025 and it reports ERI of £0.85 per share, so you have £340 of ERI dated 31 December 2025, in tax year 2025/26. As a higher-rate taxpayer who has already used the £500 dividend allowance, you pay £340 × 33.75% = £114.75.

Later you sell the whole holding for £26,000. It cost £20,000. Because you declared £340 of ERI, your cost becomes £20,340 and your gain is £5,660, not £6,000. With no other gains, £5,660 minus £3,000 is £2,660, taxed at 24%: £638.40.

Had the same fund been non-reporting, the £6,000 would have been an offshore income gain taxed at 40%: £2,400, almost four times as much.

If more than 60% of a fund's assets are in interest-paying investments such as bonds or cash at any point in its period, its distributions and ERI are taxed as interest, not dividends. That means the personal savings allowance and income tax rates of 20%, 40% or 45% apply instead of the dividend allowance and dividend rates.

• Ignoring ERI on accumulating ETFs because no cash was paid. This is the most common error with ETF holdings.
• Declaring ERI but forgetting to add it to the base cost, so the same income is taxed twice.
• Putting ERI in the tax year of the reporting period end instead of the fund distribution date.
• Assuming every ETF is a reporting fund. Check each ISIN, including funds you sold this year.
• Treating a bond fund's income as dividends.

Brokers.tax converts and matches every ETF sale under HMRC's share rules, so you can see your gains in sterling quickly. Check each fund's reporting status and add your ERI figures before relying on the totals, because a missed non-reporting fund is one of the costliest surprises an HMRC enquiry can bring.