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  • FIRST POST
    • MrWizard
    • By MrWizard 12th Mar 17, 8:48 PM
    • 13Posts
    • 1Thanks
    MrWizard
    Funds taxation
    • #1
    • 12th Mar 17, 8:48 PM
    Funds taxation 12th Mar 17 at 8:48 PM
    Hello,

    Fed up with the low interest rates, and they are getting lower. Funds really interest me as an alternative.

    I'm really new to this and have a lot more research to do but what I can't seem to figure out is if I need to pay tax in other countries, probably not, but want to double check.

    Lets take the Vanguard LifeStrategy 80% as an example. The majority of stocks is held in the US and then other countries. I know if I traded stocks in the US I'd have to file a US tax form. Is the rules different in funds or do I have to look at the tax in each country?

    Technically I'm not the one trading in the countries but in theory it's my money.

    In the UK we pay 0.5% on buying, automatically? Then up to 5,000 dividend tax free?

    Thanks
Page 1
    • jimjames
    • By jimjames 12th Mar 17, 9:33 PM
    • 11,769 Posts
    • 10,120 Thanks
    jimjames
    • #2
    • 12th Mar 17, 9:33 PM
    • #2
    • 12th Mar 17, 9:33 PM
    No if you're buying through a fund then you don't need to worry about that at all. You pay the fund manager and they deal with the admin.

    The dividend allowance is only relevant outside an ISA but is now being cut to 2000.
    Remember the saying: if it looks too good to be true it almost certainly is.
    • xylophone
    • By xylophone 12th Mar 17, 9:33 PM
    • 21,273 Posts
    • 12,214 Thanks
    xylophone
    • #3
    • 12th Mar 17, 9:33 PM
    • #3
    • 12th Mar 17, 9:33 PM
    Buying the Vanguard funds will not involve you with the US tax system.

    Presumably you will use a platform. You will be able to invest inside or outside an ISA.

    Presumably you will first use your ISA allowance (20,000 in 2017-18) so will not need to concern yourself about tax on investments within it.

    If you invest outside an ISA then you will need to be aware of any implications for tax.

    The 5000 dividend allowance for income outside an ISA will reduce to 2000 from 2018-19.

    https://www.pru.co.uk/investments/investment-articles/investments-and-tax/



    http://monevator.com/using-vanguard-lifestrategy-funds-life/

    http://monevator.com/find-the-best-online-broker/

    As an absolute beginner you might think about Hargreaves Lansdown - not the cheapest but an easy to use web site and efficient service.

    There is an abundance of information available from them and from other sources - you can and should read up before you start investing.

    https://www.moneyadviceservice.org.uk/en/articles/investing-beginners-guide
    • MrWizard
    • By MrWizard 12th Mar 17, 10:04 PM
    • 13 Posts
    • 1 Thanks
    MrWizard
    • #4
    • 12th Mar 17, 10:04 PM
    • #4
    • 12th Mar 17, 10:04 PM
    Thank you both. I will check out all the resources.

    I'm not actually putting it into a ISA or at least not planned to

    This is the newbie in me. I want to do an accumulation fund so what happens when I get to the ISA limit? I guess I just have to open another one?
    • lpgm
    • By lpgm 12th Mar 17, 10:20 PM
    • 182 Posts
    • 84 Thanks
    lpgm
    • #5
    • 12th Mar 17, 10:20 PM
    • #5
    • 12th Mar 17, 10:20 PM
    The 'ISA limit' is a limit on how much new money you can put in each year, not a limit on how much your investments can grow. So you don't normally go opening new accounts each year.

    Why don't you want to use an ISA though?
    • MrWizard
    • By MrWizard 12th Mar 17, 10:22 PM
    • 13 Posts
    • 1 Thanks
    MrWizard
    • #6
    • 12th Mar 17, 10:22 PM
    • #6
    • 12th Mar 17, 10:22 PM
    Why don't you want to use an ISA though?
    Originally posted by lpgm
    Oops, I didn't realise it was the cap on how much we can put money in. I thought the cap applied to how much investments can grow too.

    I learnt a lot from this thread, thanks.
    • bigadaj
    • By bigadaj 12th Mar 17, 10:28 PM
    • 8,926 Posts
    • 5,665 Thanks
    bigadaj
    • #7
    • 12th Mar 17, 10:28 PM
    • #7
    • 12th Mar 17, 10:28 PM
    Oops, I didn't realise it was the cap on how much we can put money in. I thought the cap applied to how much investments can grow too.

    I learnt a lot from this thread, thanks.
    Originally posted by MrWizard
    Isa is an annual cap 15240 this tax year and 20000 next tax year.

    Few drawbacks to using one for most people. The wrapper is free from most platforms and whilst you have the dividend allowance, reducing, and you annual capital gains tax allowance the isa makes record keeping a lot easier as well.
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