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Taxation of Income on OEICs and Unit Trusts

Practical Issues
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Taxation of Income on OEICs and Unit Trusts


Postby fca2019 » February 7th, 2020, 4:54 pm

Hi Guys - I hadn't realised this before as previously I've only invested in shares inside an ISA .

I understand there is an issue for bond fund and mixed fund investments. In that if the fund is "made up of more than 60% of cash or fixed interest securities such as gilts or corporate bonds, the fund will be classed as a non-equity fund and income is treated as interest" not as dividends.
source: ... ollectives

This issue has been raised on another thread, but rather than hijack that thread thought I'd start a new one.

So to be clear, for mixed funds like Vanguard LS 40 and LS 20, and bond funds, the income would be classed 'interest' and form part of your savings allowance outside of an ISA

Whereas mixed funds above 40% like Kames Diversified and LS 60 would be classed as equity and the income treated as dividend. And as such would form part of the £2k dividend allowance, outside of an ISA.

Is this correct?

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Re: Taxation of Income on OEICs and Unit Trusts


Postby DrBunsenHoneydew » February 10th, 2020, 5:25 pm

That's right - they are "Interest Dividends".

In the Tax Return they are lumped in with ordinary interest from banks and building societies:

Tax Return Notes SA150 say:

UK interest
Include in box 1 (already taxed) or box 2 (untaxed on receipt) any interest from:

bank and building society savings, including internet accounts

UK authorised unit trusts, open-ended investment companies and investment trusts
etc... .

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