Mutual Funds Tax Shake_Up
Published / Last Updated on 06/04/2008
Mutual Funds Tax Shake-Up
The Government is considering a radical overhaul of the taxation regime for mutual funds; which could see all investors given responsibility for declaring income from their funds.
The proposals would be tax-neutral for investors but would mean that basic-rate taxpayers become liable for declaring income from mutual funds every year. Instead of taxing the fund manager on income, the Government is planning to transfer this tax to individual investors, so basic-rate taxpayers would have to pay the 20 per cent tax on dividends and higher-rate taxpayers the 40 per cent rate.
Our view
Very few basic-rate taxpayers complete a tax return and so may fail to declare their full income. This will complicate things for investors rather than make them easier.
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