PricewaterhouseCoopers The Tax Benefits of ISAs – Capital Gains Tax (CGT) Gains made on assets sold within ISA are free from CGT Gains made on assets withdrawn from ISA are free from CGT Approved all employee share schemes/SAYE etc 90 days Market value on date of transfer ISA is not exempt from Inheritance Tax Effect of Death Moving overseas
PricewaterhouseCoopers The Tax Benefits of ISAs – Income UK Dividend Income Now received with a non reclaimable tax credit of 10% Until 5/04/2004 one/ninth of the dividend distribution can be reclaimed After 5/04/2004 no reclaim available Interest Tax free Interest on cash held in stocks and share component or insurance component is taxed at lower rate
PricewaterhouseCoopers ISAs Compared To Other Investments Individual Pension Contributions Tax relief on contribution Tax on fund Tax on benefits Flexibility Unit Trusts/OEICS/Investment Trusts (i.e. Collective Investment Schemes) Tax on gains inside fund Tax on gains realised by investor Tax on income
PricewaterhouseCoopers ISAs Compared To Other Investments Insurance Bonds (onshore) Tax on income Tax on gains made in the policy Tax on gains realised by investor Tax charge on death Insurance Bonds (offshore) Differences with onshore Going overseas Highly personalised bond rules
PricewaterhouseCoopers How Attractive Are ISAs? If you want tax relief on investment Pension contributions Tax efficiency for income on investments ISA/Pension Scheme Onshore insurance bond for higher rate tax payer Collective Investment Schemes Offshore insurance policy Tax efficiency for gains made inside fund ISA/Pension contributions/Collective Investment Schemes/Offshore insurance policy Onshore insurance policy
PricewaterhouseCoopers How Attractive Are ISAs? Tax efficiency on amounts/gains realised from investment – higher rate tax payer – long term investor ISA Collective Investment Scheme (particularly if CGT allowance available) Pension scheme Onshore insurance policy Offshore insurance policy Basic rate taxpayer? As higher rate tax payer
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