The AITC has published an investment trust fact sheet showing investors how to reduce potential tax ...
The AITC has published an investment trust fact sheet showing investors how to reduce potential tax liabilities to maximise returns.
Themes addressed include tax treatment of investment trust companies and advantages of closed-end funds in the light of tax concessions available.
Investment trusts are exempt from tax on their capital gains, although they are subject to corporation tax on some sources of investment income, including interest from bond holdings and offshore dividends.
However, investment trusts are allowed to offset most of their expenses, such as management fees and interest paid on gearing against this income to reduce their corporation tax liability.
Like all companies they are also exempt from tax on dividends received from UK companies.
Other subjects dealt with in the publication include tax and the private investor, capital gains tax, personal tax allowances, tax treatment of dividend income and investing for non-tax payers.
It also tackles the issue of offsetting losses against capital gains.
Annabel Brodie-Smith, communications director at AITC said: 'As the end of the tax year approaches it is a good time to start thinking about how to make the most of tax concessions. Investment trusts can be highly tax efficient vehicles and this, combined with their investment advantages, makes the case in their favour compelling.
'This factsheet outlines how investors can use investment trusts to apply rules on income tax and capital gains tax to their advantage. Investors may want to maximise tax concessions available by purchasing an investment trust in an Isa wrapper.'
• For a free copy of the AITC's Investment Trust Tax Advantages factsheet call 0800 085 8520.
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From 1 March