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Author: hoofhearted100 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 20634  
Subject: Tax treatment of REITs within an ISA Date: 02/01/2007 15:27
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Obviously you can hold a REIT within a self-invest ISA, and capital gains are tax-free, but I'm not clear about the tax treatment on the dividends, different internet sources contradict each other. The question will become more important when PEPs get folded into ISAs in the Spring.

There are three tax treatments of income within a self-invest ISA:

1. Company dividends are taxed at 10% and it's not reclaimable

2. On Bonds, the income tax at 20% has been deducted from dividends/interest, but is reclaimable for you by your ISA provider

3. Interest on cash (and the amount of cash should not be much, and should not be left there for long if it is) is taxed by your ISA provider deducting it at 20%

Which of these regimes will apply to the income srising from REITs?

If anyone knows, thanks in advance.

Hoofhearted
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Author: Swill453 Big funky green star, 20000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14393 of 20634
Subject: Re: Tax treatment of REITs within an ISA Date: 02/01/2007 16:19
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There are three tax treatments of income within a self-invest ISA:

1. Company dividends are taxed at 10% and it's not reclaimable


This isn't true. Someone else can explain the detail, but no tax is payable on dividends in an ISA. Or outside an ISA for basic rate taxpayers.

Scott.

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Author: Leither Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14394 of 20634
Subject: Re: Tax treatment of REITs within an ISA Date: 02/01/2007 20:17
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1. Company dividends are taxed at 10% and it's not reclaimable

This isn't true.


But we know what was meant; it's explained in great detail here -

http://boards.fool.co.uk/Message.asp?mid=7906059

Leither.

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Author: Swill453 Big funky green star, 20000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14395 of 20634
Subject: Re: Tax treatment of REITs within an ISA Date: 02/01/2007 20:28
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1. Company dividends are taxed at 10% and it's not reclaimable

This isn't true.


But we know what was meant; it's explained in great detail here -

http://boards.fool.co.uk/Message.asp?mid=7906059


I knew Gengulphus had explained it somewhere. The question is (as I understand it) about what happens within an ISA to dividends received from REITs. In that context it's not helpful to presume that ordinary company dividends are taxed in an ISA.

The question was asked here in a previous thread http://boards.fool.co.uk/Message.asp?mid=10336050&sort=whole where a reference to a post by Gengulphus (again!) on the HYP board was mentioned.

Scott.

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Author: NeilW Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14396 of 20634
Subject: Re: Tax treatment of REITs within an ISA Date: 03/01/2007 08:32
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Which of these regimes will apply to the income srising from REITs?

None of them. It's not a reclaim regime AFAIK.

Income from REITs should be paid gross into ISAs as long as the REIT registrar can identify your ISA provider on the register. I would imagine that most nominee companies will give the REIT registrar a separate registration for those holdings in an ISA wrapper as opposed to those held in personal names - cos it'll reduce their workload to nothing.

NeilW





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Author: btpharma Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14401 of 20634
Subject: Re: Tax treatment of REITs within an ISA Date: 04/01/2007 00:36
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1. Company dividends are taxed at 10% and it's not reclaimable

This isn't true.


But we know what was meant; it's explained in great detail here -



Whatever the explanation and words used surely dividends are taxed

When advanced corporation tax was applied clarity ruled but the new tax rules are designed to obfuscate.

Dividends are paid from taxed profits. Because ACT has abolished a notional tax credit is attached to dividends. This is given a value of 10% but it is worth the basic rate of income tax to a basic rate taxpayer outside a PEP/ISA. If the basic rate of tax is discharged by the tax credit then dividends are deemed to be taxed.

BTP


PS Here is a little plug for Firefox. I have recently installed FFv2 which comes with a spell checker which has come into play here.

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