Question
There are several ITs from various providers that provide a good yield. Is there an easy way to hold these so that the income is Tax free. (My SIPP makes an annual charge for holding ITs, and my ISAs have been carefully consolidated under Cofunds - who also don't deal with ITs )
Answer
Yes, but it will mean using your ISA or pension allowance via a stockbroker/platform that allows shares to be held.
I'm afraid this will entail a bit more paperwork, annoying after you've so carefully moved your ISAs onto Cofunds and used a SIPP elsewhere, but it's pretty straightforward.
If you plan to use your ISA allowance for the current 2011/12 tax year then you can simply invest the money via the new chosen ISA provider. Otherwise, you could use some of your existing ISA money by transferring some Cofunds holdings across to the new provider. The money will be transferred as cash, so you can simply invest this once it arrives at the new ISA provider (the process usually takes a few weeks).
As for which ISA provider to chose, look for one that offers low cost share dealing and doesn't charge for the ISA wrapper. The cheapest I've found to date is x-o.co.uk (review here), although Interactive Investor, TD Warehouse and Alliance Trust Savings are also competitive.
If you'd prefer to use a pension for holding investment trusts consider a low cost SIPP provider who doesn't charge to hold shares - see my review of Sippdeal here for a good example.
Note: it's impossible to enjoy truly tax-free dividend income (as the corporation tax paid by companies on profits before dividend income is paid out cannot be reclaimed), but at least within an ISA there's no further tax on dividend income if you're a higher or top rate taxpayer. The same is true within a pension, although when you eventually draw an income it's taxable.
Just a word of warning re: high yielding investment trusts - make sure you fully understand the risks involved. The high yield might be due to the trust borrowing extra money to invest (known as 'gearing') - great when markets rise, but it will exacerbate losses when they fall. Or you might be looking at split-capital income shares, where the return of capital depends on performance between now and the investment trust's wind up date. In the right markets both could prove good investments, but they're arguably more risky than a plain vanilla equity income fund.
There are several ITs from various providers that provide a good yield. Is there an easy way to hold these so that the income is Tax free. (My SIPP makes an annual charge for holding ITs, and my ISAs have been carefully consolidated under Cofunds - who also don't deal with ITs )
Answer
Yes, but it will mean using your ISA or pension allowance via a stockbroker/platform that allows shares to be held.
I'm afraid this will entail a bit more paperwork, annoying after you've so carefully moved your ISAs onto Cofunds and used a SIPP elsewhere, but it's pretty straightforward.
If you plan to use your ISA allowance for the current 2011/12 tax year then you can simply invest the money via the new chosen ISA provider. Otherwise, you could use some of your existing ISA money by transferring some Cofunds holdings across to the new provider. The money will be transferred as cash, so you can simply invest this once it arrives at the new ISA provider (the process usually takes a few weeks).
As for which ISA provider to chose, look for one that offers low cost share dealing and doesn't charge for the ISA wrapper. The cheapest I've found to date is x-o.co.uk (review here), although Interactive Investor, TD Warehouse and Alliance Trust Savings are also competitive.
If you'd prefer to use a pension for holding investment trusts consider a low cost SIPP provider who doesn't charge to hold shares - see my review of Sippdeal here for a good example.
Note: it's impossible to enjoy truly tax-free dividend income (as the corporation tax paid by companies on profits before dividend income is paid out cannot be reclaimed), but at least within an ISA there's no further tax on dividend income if you're a higher or top rate taxpayer. The same is true within a pension, although when you eventually draw an income it's taxable.
Just a word of warning re: high yielding investment trusts - make sure you fully understand the risks involved. The high yield might be due to the trust borrowing extra money to invest (known as 'gearing') - great when markets rise, but it will exacerbate losses when they fall. Or you might be looking at split-capital income shares, where the return of capital depends on performance between now and the investment trust's wind up date. In the right markets both could prove good investments, but they're arguably more risky than a plain vanilla equity income fund.
Read this Q and A at http://www.candidmoney.com/questions/question464.aspx
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