Glossary · UK
What is Excess Reportable Income (ERI)?
Income an offshore reporting fund earns but does not distribute to investors -- still taxable as if it had been paid out, even though no cash is received.
Full Definition
Excess Reportable Income (ERI) applies to UK investors holding offshore funds with HMRC 'reporting fund' status (common for many accumulation-share-class offshore ETFs and funds). A reporting fund must report to HMRC, and to investors, the amount of income it earned during the accounting period that was not actually distributed in cash -- the excess of reportable income over the distribution. Even though no cash reaches the investor, this excess is treated as if it had been paid out and must be declared and taxed as income (dividend or interest, depending on the fund's asset mix) in the tax year the report is issued, typically several months after the fund's year end. Failing to track and declare ERI is a common and easily-missed Self Assessment error for investors in accumulation offshore funds, since no dividend voucher or bank credit prompts the investor to report it -- the figures must be sourced from the fund manager's reporting fund statement, usually published on their website.