Question on UK Equity Income Fund

S

sambowden

Registered User
Messages
12
Hi,
So complete newbie question here.
Basically, when I was a kid my uncle set this up for me, knew very little about it, I'd get the odd letter but never really looked into it.

Anyway, I have a small bit of money in a couple of funds:
https://fundcentres.legalandgeneral...ity-Income-Fund_30-11-2022_UK-ADV_UK-PRIV.pdf
and

Columbia Threadneedle Investments - Funds and Prices - CT UK Monthly Income Fund Z Income GBP- T2UKMI-GB00B8BV4509 - UK - EN - Intermediary

On this page
www.columbiathreadneedle.co.uk www.columbiathreadneedle.co.uk

Funds managed in UK.

I've never sold any of it, but I'm guessing I've been getting some dividends that are getting auto invested.

My question is, what exactly are these funds!? I understand at a basic level the concept of stocks, ETFs, dividends. But I'm not sure where these fit in? The extra complexity being these are UK fund in GBP. I guess I'm most interested in figuring what, if anything I need to be looking into in terms of tax payments.

Thanks.
 
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It's a unit trust/UCITS as stated in the document.

Fund Centre | Legal & General | UK Equity Income Fund

fundcentres.lgim.com fundcentres.lgim.com

UCITS | Central Bank of Ireland

UCITS established in Ireland are authorised under the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011 (“the UCITS Regulations”). The UCITS Regulations, which transpose Council Directive 2009/65/EC, Commission Directive 2010/43/EC and...
www.centralbank.ie www.centralbank.ie
www.investopedia.com

Undertakings for Collective Investment in Transferable Securities

A public limited company that coordinates the distribution and management of unit trusts among countries within the European Union.
www.investopedia.com www.investopedia.com
I can't answer the tax question I'm afraid.
 
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You need to file a Form 11 or Form 12 return and pay Exit Tax of 41% on any dividends you received from the funds - also there is Exit tax on deemed disposal every 8 years from early 2000s
 
jpd said:
You need to file a Form 11 or Form 12 return and pay Exit Tax of 41% on any dividends you received from the funds - also there is Exit tax on deemed disposal every 8 years from early 2000s
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Wouldn't dividends normally be reinvested/accumulated internally in a unit linked fund like this rather than being paid to unit holders?

Could there be any capital acquisitions tax issue here from the original gift of the fund from uncle to nephew?
 
Okay thanks, ya that was my guess, that they had same rules as EFTs. My only thought was on the UK aspect, in that I have seen mention ofthat rule applying to:
  1. Non-Irish UCITS, domiciled in EU (you can be on the hook for 41% of growth AND dividends!)
But as UK is neither Irish or EU, I wasnt sure where that fell...
 
ClubMan said:
Wouldn't dividends normally be reinvested/accumulated internally in a unit linked fund like this rather than being paid to unit holders?

Could there be any capital acquisitions tax issue here from the original gift of the fund from uncle to nephew?
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Thanks for reply, ya to be honest, it never seemed like I had a choice to receive any of the dividends. 'Original gift', would it be a gift? It was set up in my name, couple of hundred quid put in years and years ago...I dunno, I'm not too worried about historic stuff at this stage tbh, If I can sort out things into the future I will be happy enough!
 
There could be Exit Tax due - that would depend on the dates you acquired/were gifted the funds
 
This sounds like a nightmare scenario potentially.

Not to be alarmist, but when interest and penalties are taken into account, you could owe Revenue a very significant portion of the total value of the investment.
 
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Tax liabilities of 20-41% on any dividends, depending on when they arose.

Tax liabilities of 20-41% on any gains, or deemed gains every eight years, depending on when they arose.

Additional penalties of up to 100% of the tax liability depending on Revenue’s view of the offence and how you deal with it.

Interest at 8-10% per year on any liability, which has the effect of adding the same tax liability again every 10 years (it’s ‘simple’ rather than ‘compound’ interest).

So, say you owe €10,000 from 2003. Another €10,000 could be lobbed on in the form of a penalty, plus the original €10,000 doubles after 10 years to €20,000 and then increases to €30,000 after a further 10 years, meaning that by 2023 you could owe Revenue a total of €40,000.

i.e. four times the original €10,000 liability.
 
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jpd said:
You need to file a Form 11 or Form 12 return and pay Exit Tax of 41% on any dividends you received from the funds - also there is Exit tax on deemed disposal every 8 years from early 2000s
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Not necessarily. Aviva, for example, sells three L&G funds (but not this one), wrapped in their Investment Bond products. Tax liabilities are paid by Aviva when they arise, so there is no need for a holder to make a tax return. So if the OP’s funds are similarly structured, i.e. as part of an investment policy, he / she has no need to make a tax return. Also, the OP should receive an annual statement of benefits from the Irish insurance company.


sambowden said:
, I'd get the odd letter but never really looked into it.
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From whom did you receive this letter? Was it from an Irish insurance company or from the UK? If from Ireland it should contain your policy number allowing you to contact the provider who is best placed to answer your questions.

If from the UK, you may have tax liabilities for an offshore fund, as outlined in post #3 above, i.e. 41% income tax plus PRSI plus USC.
 
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PMU said:
Not necessarily. Aviva, for example, sells three L&G funds (but not this one), wrapped in their Investment Bond products. Tax liabilities are paid by Aviva when they arise, so there is no need for a holder to make a tax return. So if the OP’s funds are similarly structured, i.e. as part of an investment policy, he / she has no need to make a tax return. Also, the OP should receive an annual statement of benefits from the Irish insurance company.



From whom did you receive this letter? Was it from an Irish insurance company or from the UK? If from Ireland it should contain your policy number allowing you to contact the provider who is best placed to answer your questions.

If from the UK, you may have tax liabilities as outlined in post #3 above.
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Thanks. Ya letters from the UK, directly from L&G & Thredneedle, outlining current total of my holding. Half yearly statements basically.

I've read elsewhere that as its a fund managed by fund managers it might fall under the same tax rules as ordinary shares, in the same way investment 'trusts' do, i.e. 33% CGT on gains and no deemed disposal? Anyway, I will keep researching. I will more than likely sell up the whole lot, pay 41% tax on that and leave it at that. If the tax man wants to come looking for the few pennies from the undeclared dividends we will deal with that then, but sure we will cross that bridge if it comes.
 
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PMU said:
Not necessarily. Aviva, for example, sells three L&G funds (but not this one), wrapped in their Investment Bond products. Tax liabilities are paid by Aviva when they arise, so there is no need for a holder to make a tax return. So if the OP’s funds are similarly structured, i.e. as part of an investment policy, he / she has no need to make a tax return. Also, the OP should receive an annual statement of benefits from the Irish insurance company.



From whom did you receive this letter? Was it from an Irish insurance company or from the UK? If from Ireland it should contain your policy number allowing you to contact the provider who is best placed to answer your questions.

If from the UK, you may have tax liabilities for an offshore fund, as outlined in post #3 above, i.e. 41% income tax plus PRSI plus USC.
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1) There’s no PRSI or USC.

2) These clearly aren’t investment policies or anything to do with Irish insurance companies.
 
Thanks for reply, when you say clearly not investment policy, what do you mean by that if you don't mind? Is there any information online that says 'Equity Income Funds' fall under the category of ETF as opposed to Investment Trust/Fund for Irish Tax? For example one thing I read about Investment Trusts/Funds was that one thing that defines them is that they are managed by fund managers, which the 2 funds I have linked to are...
I understand it might be obvious to you, but as I said in my first post I am a complete newbie in this regard.
Thanks.
 
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sambowden said:
Thanks for reply, when you say clearly not investment policy, what do you mean by that if you don't mind? Is there any information online that says 'Equity Income Funds' fall under the category of ETF as opposed to Investment Trust/Fund for Irish Tax? For example one thing I read about Investment Trusts/Funds was that one thing that defines them is that they are managed by fund managers, which the 2 funds I have linked to are...
I understand it might be obvious to you, but as I said in my first post I am a complete newbie in this regard.
Thanks.
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An investment policy would be an investment wrapped in an Irish life policy by a life company.

With those, the 41% tax is taken care of at source.

e.g. a Standard Life Investment Bond, typically purchased through an Irish broker or sometimes direct from Standard Life (the “life company”).
 
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