Independent Financial Advisors - IFA Southampton, UK

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Investment Trusts

An Investment Trust is a company listed on the Stock Exchange, which invests in other companies or financial instruments and therefore the value of a holding in an Investment Trust is determined by the demand for its shares on the stock market.

Investment Trust companies where first set up over 100 years ago to provide small investors who wanted to invest overseas with an opportunity to do so at low cost and to diminish their risk by spreading their investment over a number of stocks.

Investment Trusts are a collective investment, pooling the money of many investors and spreading it across a diversified portfolio of stocks and shares which are selected and managed by professional investment managers.

Income and gains from investment trusts are taxed in the same way as income and gains from other shares.

Investors are liable to Capital Gains Tax if they sell their investment trust shares for more than they paid for them. However, each individual has their annual Capital Gains Tax exemption which they can use to offset some or all of the gain.

If the distribution is taken from the Trust income will be payable net of 10% tax, basic rate tax payers will have no further tax to pay. Higher rate tax payers will have a further tax liability of 22% making a total tax liability of 32.5% on the “gross” dividend income.
 
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