Funds held in ISAs as well as pensions?

Chris_P_2

Ok, here is something I have never understand. Lets say a manager buys lots of shares, lots of bonds, and some property - he is a fund manager of a collective.

I can buy directly into that fund and would hold a direct investment. This woukd be taxed as normal.

I can hold that fund via a pension or ISA. But now that fund holding is tax free. Who knows which holding of the fund should not be taxed etc?

dunstonh

Who knows which holding of the fund should not be taxed etc?

The ISA manager or pension manager (the adminstrator) does that work.#

Just like if you buy the same funds unwrapped, you take on the responsibility for the tax. e.g. if you are non taxpayer and using fixed interest sector funds you claim the tax back. The ISA manager or pension manager is doing the same.

Chris_P_2

so the fund manager knows exactly how much of his fund is held by ISA + pension investors, and reclaims said tax?

noh

Chris_P wrote: »

so the fund manager knows exactly how much of his fund is held by ISA + pension investors, and reclaims said tax?

Not quite.
As dunstonh said.
It is the manager of the ISA or Pension wrapper that reclaim the tax if there is any to reclaim.

Debt_Free_Chick

Chris_P wrote: »

so the fund manager knows exactly how much of his fund is held by ISA + pension investors, and reclaims said tax?

Just to clarify .... what tax are you talking about, please?

Chris_P_2

Debt_Free_Chick wrote: »

Just to clarify .... what tax are you talking about, please?

Income tax & CGT, surely?

Chris_P_2

noh wrote: »

Not quite.
As dunstonh said.
It is the manager of the ISA or Pension wrapper that reclaim the tax if there is any to reclaim.

Ok, so say I hold an HSBC stocks & shares ISA that invests in an invesco perpetual fund. The Invesco Manager does his thing and invests in the underlying holdings - It is the HSBC manager who reclaims the tax?

If so who from? If from the fund manager, does he have to reclaim?

noh

Chris_P wrote: »

Ok, so say I hold an HSBC stocks & shares ISA that invests in an invesco perpetual fund. The Invesco Manager does his thing and invests in the underlying holdings - It is the HSBC manager who reclaims the tax?

If so who from? If from the fund manager, does he have to reclaim?

In your example.
If there is any tax to reclaim the HSBC ISA manager reclaims the tax from HMRC.

Debt_Free_Chick

Chris_P wrote: »

Income tax & CGT, surely?

What income tax and CGT?

This is why I asked about the tax you were thinking of, as there is no tax for the fund manager to reclaim. The only tax to be "reclaimed" is the basic rate tax relief on any personal contributions made to a personal or stakeholder pension - but that's nothing to do with the investment fund. That tax relief is collected from HMRC by the pension provider, paid as an additional contribution in to the pension plan and then invested in the underlying investment funds.

If there is any income tax or CGT to pay, then that's a matter for you and your tax return. For tax-exempt plans - ISAs and pensions, for example - you don't need to declare either on your tax return. If they're not tax-exempt, then you need to declare any dividends for IT purposes and any gains for the purpose of CGT.

noh

There is potentially some tax that can be reclaimed by the ISA or Pension manager.
Interest distributions (paid by trusts investing mainly in fixed interest securities and/or short term deposits) are generally paid after the deduction of Income Tax currently at 20%.
That tax is reclaimed by the ISA or Pension fund manager from HMRC.

As you say there is no tax to reclaim on dividend distributions from funds that invest mainly in shares and/or property as no tax has been deducted in the first place.

Chris_P_2

Debt_Free_Chick wrote: »

What income tax and CGT?

This is why I asked about the tax you were thinking of, as there is no tax for the fund manager to reclaim. The only tax to be "reclaimed" is the basic rate tax relief on any personal contributions made to a personal or stakeholder pension - but that's nothing to do with the investment fund. That tax relief is collected from HMRC by the pension provider, paid as an additional contribution in to the pension plan and then invested in the underlying investment funds.

If there is any income tax or CGT to pay, then that's a matter for you and your tax return. For tax-exempt plans - ISAs and pensions, for example - you don't need to declare either on your tax return. If they're not tax-exempt, then you need to declare any dividends for IT purposes and any gains for the purpose of CGT.

I was referring to tax in the fund: ie interest. and if a fund manager buys a holding, it increases hugely and he then sells - there is CGT to pay, no??

sort of what noh said.