Re: Capital Investment Bonds and CGT


"Daytona" <junk721176@xxxxxxxxxxx> wrote in message
news:b58cb269-434a-4cb2-9caa-b379428a0f03@xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
On 24 Apr, 22:54, "Rob graham" <rttgraham...@xxxxxxxxxxxxxx> wrote:

CGT is one of the taxes paid by the fund to the Revenue. Therefore you
don't
have to pay it directly. However, the fund's liability to this tax (and
income tax) effectively reduces its performance. OTOH, you get the growth
with no more tax to pay - except, possibly, higher rate income tax.

Thanks Rob

I'm confused, I'm trying to compare standalone Unit Trust investments
(NU Property & Global Property) with the same UTs in a CIB.

So the UTs pay CGT internally on the profits from their investments ?
Does the individual pay CGT on the profits upon withdrawal from either
the UTs or CIB ?

I don't really understand CIBs and I'm struggling to see the point of
CIBs on a £60,000 investment for 4 years.

Daytona

U/Ts don't pay any CGT within the fund, CIBs do. When you encash a U/T you
will be subject to CGT in the same way as if you had encashed shares or sold
a valuable picture. When you encash a CIB there will be no such liability.
It will have been taken care of by a regular payment by the insurer to the
Revenue. So, if you make a gain on a U/T which would not have been
chargeable (i.e. below the taxfree limit) you will not pay anything. But
with a CIB you are paying a bit whether you would have been liable or not.

With the CIB the payment takes care of basic rate income tax as well, but
not higher rate.

So if you make the comparison you've mentioned, the U/T will grow faster
than the CIB, but you may have to pay CGT on it, depending on the exact
situation when you make the encashment. Also, there is no income tax
chargeable on a U/T encashment.

Which is best for you depends on the above factors, and others as well,
which are more complicated.

Rob


.

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