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Collective investments that distribute income

For those with minor children/grandchildren, opportunities that existed for using their personal income tax allowance by setting up trusts for their benefit under which the trustees invest in distribution units of equity unit trusts, OEICs and investment trusts ceased to exist from 6 April 1999. This is because the tax credit attaching to dividends from UK companies and distributions from equity unit trusts can no longer be reclaimed. Despite the pressure to reinstate this ability, no action has been taken although the Conservatives have stated that, if elected, they would act to reinstate the tax credit reclaim for non-taxpayers – subject, of course, to the anti-avoidance provisions applying to parental settlors of settlements for minor unmarried children.

In relation to trusts established for a minor unmarried child where that child has an entitlement to income, if the income exceeds £100 gross in a tax year it is automatically taxed on the parental settlor irrespective of whether the income is paid to or for the child&#39s benefit. However, scope exists for trusts for grandchildren where consideration should be given to investing offshore to obtain the benefit of gross dividends or distributions. If it is desired to achieve tax effective accumulation of income from UK investments held in a trust under which the grandchild has an interest in possession then, subject to investment considerations, it will be necessary to invest in areas that produce income other than UK dividend income. As well as interest from cash deposits, this will include income from corporate bonds and certain unit trusts whose income payments are treated as interest distributions rather than dividends.


Double duty stamped out for Muslims

The Treasury&#39s pledge to scrap the double charging of stamp duty on Islamic mortgages has been welcomed by the mortgage industry as a step towards a level playing field with non-muslims.Under current regulations muslims are effectively forced to rent their property from a specialist financier because they are unable to pay interest under Islamic law. […]

Newbigging appointed High Sheriff of Wiltshire

Friends Provident chairman David Newbigging has been named as High Sheriff of Wiltshire, a position appointed annually by the Queen.His responsibilities will include the support of four local charities – the Wiltshire and Swindon Community Foundation, Crimebeat, Wiltshire Wildlife Trust and Kennet Furniture Recycling – along with a number of ceremonial duties.Newbigging, who lives in […]

Neptune joins Skandia fund platform

Neptune, the fund management company previously known as Orbitex, has joined Skandia&#39s multi-manager platform.Neptune&#39s market leading balanced and UK equity funds are now available to Skandia&#39s MultiBond, MultPension, MultIsa, MultiPep and MultiFund investors.Skandia investment marketing manager Ian Thomas says: “Since its launch May 2002 Neptune has quickly built itself an excellent reputation in the industry. […]

Only 1 per cent know how much they can save tax-free

Just over half the population knows they can save for the future tax-free and only 1 per cent thinks they can save more than £10,000 tax-free according to research from National Savings & Investments.The Treasury-sponsored savings provider says in any given tax year, people can save up to £63,000 tax-free. Investors are allowed to put […]

The return of emerging markets

Ewan Thompson, Head of Emerging Market Equities, Neptune Although in political terms 2016 will be remembered for the seismic shocks of the Brexit vote and Trump’s presidential victory, the year was also a watershed for the global economy and emerging markets in particular. Following five years in the wilderness, the conditions are now in place […]


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