Unit trusts and OEICs

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18. Tax shelters

Both income tax and capital gains tax can be legally avoided by sheltering unit trusts and OEICs in an Individual Savings Account (ISA) or a Personal Equity Plan (PEP).

• The maximum allowable investment in an ISA in the current tax year is £7,200.
• It is no longer possible to take out a new PEP. However, existing PEPs still retain their tax privileges and the investments can be transferred to alternative PEP managers.
• Investors who hold their shares and units in PEPs and ISAs lost their right to reclaim the tax credit on dividends on 6th April 2004.

1. What is a unit trust? 2. What is a unit? 3. The trust deed and scheme particulars 4. The people behind a unit trust 5. Charging structure of unit trusts 6. Pricing of units - FSA rules on maximum offer price 7. Pricing of units - FSA rules on minimum bid price 8. Pricing of units - in practice 9. Pricing of units - historic and forward pricing 10. OEICs - Open Ended Investment Companies 11. Shares in OEICs 12. OEICs - pricing 13. OEICs - charges 14. Taxation of unit trusts and OEICs - Introduction 15. Tax treatment of dividends from equity funds 16. Tax treatment of coupons from non-equity funds 17. Capital Gains Tax 18. Tax shelters 19. Investment powers of fund managers: 'eligible investments' 20. Diversification 21. Fund classification: risk gradings 22. Selecting a fund: Defining your objectives 23. Selecting a fund: Active vs passive 24. Selecting a fund: lump sum vs regular savings 25. Selecting a fund: Past performance 26. Where to buy unit trusts and OEICs 27. Buy with or without advice? 28. The mechanics of buying 29. The mechanics of selling 30. Share exchanges and fund switches 31. Investor protection 32. Conclusion

• Exchange-Traded Funds