So, against my advice my mother invested in some of those Ulster Bank Combination Accounts several years ago. A proportion (in this case 20%) was 'deposited' in a high interest account (capital and interest of 10% paid after 2 years) and the balance was 'invested' with a view to 80% of the increase in a basket of shares paid out as a return at the end of the period. In this case, the return was of the order of 15% over 4 years.
Now that the balance of her funds have been returned, I'm trying to ascertain the tax treatment of the two parts. As I would read it, DIRT should be taken from the interest paid after 2 years, but what is the classification of the second gain. If this is a capital gain, she'd be covered by the small annual allowance. If it's interest, there would be a further DIRT liability. Any had to deal with these products (and their taxation) before?
Now that the balance of her funds have been returned, I'm trying to ascertain the tax treatment of the two parts. As I would read it, DIRT should be taken from the interest paid after 2 years, but what is the classification of the second gain. If this is a capital gain, she'd be covered by the small annual allowance. If it's interest, there would be a further DIRT liability. Any had to deal with these products (and their taxation) before?