Tax on Investment Fund

lindabea wrote: »

I read the link you gave me, but this equalisation payments.. well, it just blew my mind :eek:

Equalisation can sound complex and confusing, but it can be explained simply:
- When funds are valued, the value of the assets plus accrued income is used
- Buying a fund with accrued income results in you paying more for the assets than you would if they were valued alone
- When you receive the next dividend, the part of it that represents your "overpayment" is effectively refunded, and to avoid overtaxation it is not treated as income.

This makes it very difficult to work out your tax position without the help of your platform and is a good reason to make use of an ISA.

Has anyone mentioned excess reportable income yet?
http://monevator.com/excess-reportable-income/

lindabea wrote: »

Thank you all for your elaborate explanations. It's much appreciated. It always amazes me how much knowledge and skills there is on this forum.

If I were to proceed with a non-isa investment fund, would I have to work out the figures, or will the fund platform give me the figures I need to give to HMRC. I'm worried if I'm not able to give the correct figures to HMRC, although from the explanations above, it would appear that I would never exceed the CGT threshold.

For a UK onshore fund, you should get all you need from the platform - although different platforms present it in different ways.

For an offshore fund, you may not get the excess reportable income figure from your platform (HL doesn't seem to do it for example). The fund manager will publish it somewhere, though with some fund managers that really does take some rooting around. So personally I tend to put those funds in my ISA or SIPP.