Tax on non-ISA S&S Funds

ColdIron

I have a cash ISA that I want to fund for the forseeable future and also a S&S ISA with HL that I want to fund for another 4 or 5 years
I also want to put some cash into HL's non-ISA Fund and Share account and transfer it to the ISA in 4 or 5 years time using my annual allowance over a few years

The funds will be accumulation OEICs and I will draw no income from them

What are the tax implications?

I can't see any CGT issue as I am well under the limit
As a Basic rate tax payer I don't think there are any problems either but I am not sure about my position as a Higher rate tax payer, I will not be taking an income in either case

As a bonus question do I have to declare this on my self assessment even if there is no tax payable?

Many Thanks

jem16

ColdIron wrote: »

As a Basic rate tax payer I don't think there are any problems either but I am not sure about my position as a Higher rate tax payer, I will not be taking an income in either case

If you are a basic rate taxpayer, no extra tax is payable unless the amount from any dividend payments plus tax credit takes you into higher rate tax.

As a higher rate tax payer you are liable for an extra 25% tax on any divident payment whether or not you are taking income.

As a bonus question do I have to declare this on my self assessment even if there is no tax payable?

Many Thanks

Yes you do.

xylophone

http://www.hmrc.gov.uk/taxon/uk.htm

SnowMan

I can't see any CGT issue as I am well under the limit

You will need to do some sums to check you are within the CGT annual allowance but provided you are there is no issue.

You will have to sell the units before they go into the ISA incurring a capital gain. As long as your capital gains are within the capital gain exemption limit for the year you will be OK. HL have quite a good facility to allow you to move into an ISA each year.

As a Basic rate tax payer I don't think there are any problems either

There are no obvious problems.

but I am not sure about my position as a Higher rate tax payer, I will not be taking an income in either case

You will still be liable for some income tax on the accumulated distribution amount if you hold accumulation units see this monevator article.

As a bonus question do I have to declare this on my self assessment even if there is no tax payable?

Yes you will need to include details of the accumulated amount on your tax return whether you are a basic or higher rate taxpayer (and this amount is treated as income for the purposes of assessing whether you are marginally a higher or basic rate taxpayer).

You will be sent a tax certificate by HL at the end of the tax year with the relevant distribution amounts (albeit they aren't paid out to you but accumulated in the fund).

If your investment sale amounts are above a certain amount (4 times the annual exemption limit as indicated in the tax return notes) and you are required to fill in a self assessment tax return, then you will also have to fill in the CGT supplementary pages detailing your CGT calculations which can be a bit of a pain - even if you are within the annual CGT allowance. They ask you to do this so they can do checks that you have no CGT to pay.

ColdIron

Thanks for the speedy and clear answers chaps