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bigduckontax
bigduckontax, Accountant
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are annual returns on mixed investment 20% - 60% unit trusts

Customer Question

are annual returns on mixed investment 20% - 60% unit trusts classified as dividends or interest?
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
, I'm Keith and happy to help you with your question.
I am of the opinion that these distributions are dividends, not interest. As dividends they bear the notional 10% tax deduction, but remember dividends will be grossed up and aggregated with your other income and can push you into higher rates tax brackets.
I do hope I have assisted you with your question.
Customer: replied 2 years ago.

does the same apply with investment trusts? I seem to recall reading somewhere that with the majority of a fund invested in bonds HMRC accepted that the whole of the income arising would be classed as interest. that's why I asked my original question.

Expert:  bigduckontax replied 2 years ago.
Here is the Money Advice Service explanation of tax on Investment Trusts:
'Tax
•Any income paid is taxed at the same level as other shares. Dividends are paid with a 10% non-reclaimable tax credit that satisfies any liability rate or basic rate income tax. If you’re a higher rate or additional rate taxpayer, there is further tax to pay.
•Any profit you make from selling shares is usually subject to Capital Gains Tax.
•But many investment trusts are available as ISAs or can be held in a stocks and shares ISA, which means dividends are paid with a 10% non-reclaimable tax credit that satisfies any liability and higher rate income tax as well as Capital Gains Tax on your profits or income.'
It's still a dividend.
bigduckontax and other Tax Specialists are ready to help you
Expert:  bigduckontax replied 2 years ago.
Thank you support.
Customer: replied 2 years ago.

Thanks information. I have no further questions

Expert:  bigduckontax replied 2 years ago.
Delighted to have been of assistance.

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