The investor is only assessable to income tax on the part of the payment which reflects their period of ownership. A new investor who invests between distribution dates (but before the ex-dividend date) will still receive the full distribution for the period even though they were only invested for part of the period for which it relates. Unit trust and OEICs will have fixed dates on which income is distributed. However, it may be tax free if it falls within one of the allowances (dividend allowance or starting rate for savings/personal savings allowance). The income from unit trusts and OEICs is always taxable regardless of the share class or whether the income is actually taken or reinvested. However, they can elect to use the income they receive to purchase further shares in the fund. ![]() The income generated is paid to the investor. Income shares pay income either as interest or as a dividend depending upon on the make-up of the underlying fund.Instead it's automatically reinvested within the fund to increase the value of the existing shares/units. Accumulation shares may appeal to investors looking for capital growth as no income is distributed.These allow a choice of whether to have the income generated by the investment distributed to you or to be reinvested. Most funds offer a choice of income units/shares or accumulation units/shares. There previous rates were 7.5%, 32.1% and 38.1% (basic, higher and additional rate taxpayers). Dividend income is taxed at 8.75%, 33.75% and 39.35% (basic, higher, additional rate taxpayers), for amounts in excess of the £1,000 allowance. The first £1,000 dividend income is tax free as it's covered by the dividend allowance. Where the fund's market value derives from 60% or less in cash or fixed interest, the fund will be classed as an equity fund and income will be treated as a dividend distribution.Interest is then taxed at 20%, 40% and 45% (basic, higher, additional rate taxpayers). But there’s no personal savings allowance for additional rate tax payers. Non and basic rate tax payers may be able to receive up to £6,000 (£5,000 starting rate for savings and £1,000 personal savings allowance) of savings income taxed at 0%. Higher rate tax payers can receive £500 (reduced personal savings allowance) of savings income taxed at 0%. ![]() Where the market value of the fund is made up of more than 60% of cash or fixed interest securities such as gilts or corporate bonds, the fund will be classed as a non-equity fund and income is treated as interest.This will depend upon the mix of the underlying assets within the fund and will determine how income is taxed. Investors may receive income from their investment in the form of interest or dividends. no corporation tax is payable on capital gains within the fund.This ensures that there's no double taxation of interest. If a fund distributes interest, not dividend, then the gross interest distribution is relievable as an expense against income of the fund.Some foreign dividends may have already paid tax in the country of origin and this withholding tax may not be reclaimable. interest and rental income are subject to corporation tax at 20%.OEICs/UTs are only subject to tax within the fund on income received by the fund manager. The tax rules aim to put the investor in broadly the same position as if they had invested in the fund’s assets directly rather than through the fund. Unit trusts and Open Ended Investment Companies (OEICs) are collective investment schemes where investors purchase units or shares in a pooled fund which is run by an investment manager.Īlthough they have different structures - unit trusts operate as a trust and OEICs are established as a company - they share the same tax treatment. Jump to the following sections of this guide: Bed and breakfast rules can be avoided by repurchasing in an ISA, SIPP or spouse’s name.Gains calculated on an average cost basis.Switching between share-classes within the same fund is not a disposal for CGT. ![]() Both interest and dividends now paid gross.Dividend and personal savings allowances available on investment income.Income is taxable whether taken or reinvested.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |