Tax refunds on ISAs, Oiecs etc.

mgrhh

Good afternoon one and all,
I have a question about the above account types. These seem to be taxed at source. What I would like to know is why they are taxed at all, if they are tax free. My aged mother has asked me to look into her affairs and I am now trying to understand the GB system.
She is well over 80 yrs old - is she liable for tax at all at that age (or is that a silly question?). She has a couple of the above type of accounts and, as far as I can see, she has always paid 20% tax. Is this customary? She is not, in any sense of the word, rich, and her income is shrinking year on year, so I would have thought that these Pep, Oiecs etc. would not be taxed.
Any information on the subject is welcome.
Advance thanks and enjoy the rest of this sunny day.
Cheers

Lokolo

ISAs would not have been taxed. Simple as.

mgrhh

Sorry, the bank takes off a certain amount on each account and that is substantiated in a letter which has to be kept for tax purposes. As far as I can tell, this happens each quarter.

jem16

mgrhh wrote: »

She is well over 80 yrs old - is she liable for tax at all at that age (or is that a silly question?).

Paying tax is nothing to do with age and all to do with taxable income. If she has taxable income over £9100 then she will be liable for tax.

She has a couple of the above type of accounts and, as far as I can see, she has always paid 20% tax. Is this customary?

Cash ISA earn tax-free interest. S&S ISAs pay dvidends which come with a 10% tax credit - this cannot be reclaimed. S&S ISAs are not subject to Capital Gains Tax.

Oeics that pay dividends come with a 10% tax credit which satisfies the liability for a basic rate taxpayer. A higher rate taxpayer would have to pay 32.5% minus the 10% tax credit already paid. They would be subject to CGT if sold.

Advance thanks and enjoy the rest of this sunny day.
Cheers

Not very sunny here I'm afraid.

debbie42

As Lokolo has posted, ISAs aren't taxed. That's the whole point of them.

OEICs outside of an ISA are taxable: if your mother is below the tax threshold then she'd need to claim this back. For savings, an R85 needs submitting for each account to have the interest paid gross (you can't do this with an OEIC though).

jem16

mgrhh wrote: »

Sorry, the bank takes off a certain amount on each account and that is substantiated in a letter which has to be kept for tax purposes. As far as I can tell, this happens each quarter.

Doesn't sound like tax. Are you sure it's not management charges?

cheerfulcat

I have a question about the above account types. These seem to be taxed at source. What I would like to know is why they are taxed at all, if they are tax free.

Only ISAs are " tax free ". Dividend income is effectively taxed at 10% regardless of your personal tax position - there is a further liability to tax for a higher rate taxpayer if the dividend income is outside of an ISA but a non-taxpayer or ISA holder can no longer reclaim the tax.

I'm slightly puzzled by the 20% tax taken, unless these are bond funds.

mgrhh

How can one tell what type of account one is looking at. They just have account numbers. It seems I shall have to take a course in British banking to understand what exactly I'm dealing with. Groan!
But this is a good start, thank you for the information - and wonderfully quick responses. Thank you.
Any other pointers will be much appreciated.
Cheers

cheerfulcat

mgrhh, what does it say on the statements? They should give the name of the fund and the number of units held, as well as the value.