Investment Taxation
tax considerations for investment including income tax, CGT, Inheritance & wrappers for efficiency.
Here's a breakdown of key tax considerations for UK investors:
Income Tax
- Dividends: Income from dividends is taxed at your income tax rate. However, there's a dividend allowance that can be used to reduce or eliminate this tax.
- Interest: Interest earned on savings accounts and bonds is generally taxable as income.
Capital Gains Tax (CGT)
- This applies when you sell an asset for more than you paid for it.
- There is an annual CGT exemption, but gains above this threshold are taxed at your capital gains tax rate.
- Certain assets, like shares held within an ISA, are exempt from CGT.
Inheritance Tax (IHT)
- If your estate exceeds the inheritance tax threshold, your beneficiaries may have to pay tax on the inherited assets.
- Holding investments within certain tax-efficient wrappers can help mitigate IHT.
Tax-Efficient Investment Wrappers
- Individual Savings Accounts (ISAs): These offer tax-free growth on savings and investments.
- Pension Schemes: Provide tax relief on contributions and tax-free growth.
Other Considerations
- Double Taxation Relief: If you have income or investments overseas, you might be eligible for double taxation relief.
- Tax-Loss Harvesting: Selling loss-making investments can offset capital gains, reducing your tax bill.
- Professional Advice: For complex financial situations, consider consulting a tax advisor.
Important Note: Tax rules can be complex and subject to change. It's essential to stay updated on the latest tax regulations and consider seeking professional advice if needed.
INVESTMENTS 1: The Fundamentals of Investing
INVESTMENTS 2: Types of Investing
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