Investment Trust

Investment Trust

Investing in Investment Trusts allows you to invest in a great deal of stocks and shares with other people wishing to do the same.   Investment Trusts are public limited companies and issue a fixed number of shares.  This is why, unlike Unit Trusts and OEICs, they are classed as 'closed ended'.

It is usual for the Directors of the Investment Trust to contract out the investment management to professionals.  Investment Trust shares are traded on the London Stock Exchange and the price of them depends on supply and demand.  If people buy Investment Trust shares which, if added altogether, were valued at less than the assets of the Investment Trust, the share price is termed as 'trading at a discount'.  This is because people are buying the assets of the Investment Trust company at a price lower than the market value.  Conversely, if people buy Investment Trust shares which, if added altogether, were valued at more than the assets of the Investment trust, the share price is termed as 'trading at a premium'.  This is because people are buying the assets of the Investment Trust Company at a higher price than the market value.

An Investment Trust usually makes an annual charge to cover the cost of investment management.  Some Investment Trusts also have a performance related fee, if they outperform certain parameters.  Annual fees for Investment Trusts tend to be lower than those for Unit Trusts and OEICs.  Investment Trusts offer investment in companies that have a wide spread of different markets.  Whether you require income, growth or both income and growth there will be a Investment Trust to meet your needs.  Depending on the level of risk you wish to take with your investment, you will have the opportunity to invest in different categories of Trusts from the UK, Europe or areas such as smaller companies, emerging markets, property and commodity and energy.

Lump sum investments: Yes

Regular premiums allowed: Yes

Flexible payments allowed (stop/start/additional/increase/decrease): Yes

Investment Risk Profiles Available:

• Medium risk funds available
• Medium to high risk funds available
• High risk funds available

Changing funds and risk profile allowed: Yes

Moving to another company allowed: Yes

Life Insurance Included: No

Personal Tax Benefits:

• Capital gains tax free only up to yearly capital gains tax allowance (currently £3,000.00

Investments Trusts are 'Limited Companies' and therefore subject to shares based Dividend Income Taxation.

Income can form part of your Tax Free Dividend Allowance (2024 Tax Year) £500.00 per year.

For dividend income received above the yearly allowance, it is charged to tax at a rate where the taxable income falls within the usual income tax bands

• Non Tax Payers - no further tax
• Dividend in Basic Rate Tax Band (20.00 %) - tax due at 8.75 %
• Dividend in Higher Rate Tax Band (40.00 %) - tax due at 33.75 %
• Dividend in Additional Rate Tax Band (45.00 %) - tax due at 39.35 %

Can package inside an ISA to make capital gains tax and income tax free.

Can be held inside Trust: Yes

Suitable for:

• Children
• Adults
• Business
• Trusts
• Charities
• Pension Fund Investment
• Non Tax Payers
• Basic Rate Tax Payers
• High Rate Taxpayers