9 - Direct Investments (B)

Question 1

What’s a less risky way of investing in shares, if not directly?

Answer 1

Investing in collective investment schemes, such as investment trusts, OEICs and unit trusts

Question 2

What is the CGT treatment on directly held shares?

Answer 2

Potentially subject to CGT

Question 3

What is the dividend allowance and the dividend rates thereafter?

Answer 3

£1,000, then:
8.75% for basic-rate taxpayers;
33.75% for higher-rate taxpayers; and
39.35% for additional-rate taxpayers.

Question 4

What is a stock dividend?

Answer 4

New shares offered instead of taking a dividend, which is treated as being equal in value to the dividend, for income purposes

Question 5

How are stock dividends taxed?

Answer 5

In the same way as cash dividends

Question 6

How are overseas dividends taxed?

Answer 6

Treated as foreign income and liable to income tax, at the same rates on dividends

Question 7

What is an investment trust?

Answer 7

It is a limited company that invests its shareholders’ money in other stocks and shares.

IT IS NOT A TRUST.

Question 8

In what form does an investor receive income from an investment trust?

Answer 8

Dividends (subject to dividend tax)
Interest distributions (savings income)

Question 9

What is a REIT?

Answer 9

Real estate investment trusts (REITs) are a special vehicle for investing in property.