OEIC

OEIC Open Ended Investment Company

Investing in Open Ended Investment Companies - OEICS allow you to invest in a great deal of shares with other people wishing to do the same.  Each persons money is pooled together and then invested.  Each person is then issued with shares in the fund company.  Each share represents an equal fraction of the underlying assets in the fund.  An OEIC is a self contained company which appoints directors, holds annual general meetings and issues shares.  There can be a charge (known as an initial charge) to cover the setting up of your holding.  There is also usually a management charge for the ongoing management of your investment. 

An OEIC is classed as 'open ended' because the fund will increase or decrease depending on demand.  An investor can sell their shares back to the OEICs.  It is usual for shares to be valued in line with the underlying investments held by the fund.  This means that the value of your holding could rise or fall on a day to day basis. OEICs offer a wide spread of different markets and types of investment.  Whether you require income, growth or both income and growth there will be OEICs 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 general funds or funds concentrated in a particular area, such as investment in the UK, Europe or areas such as smaller company funds and technology funds.

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)
• 20.00 % income tax deducted at source (none shares/none dividend income) - can be reclaimed by non tax payers

For Non-Shares Based OEIC Income in 2024 Tax Year

• Basic rate tax payer (20.00 %) has no further liability to income taxes
• High rate tax payer (40.00 %)  subject to further 20% on non-shares unit trust income
• Additional rate rate (45.00 %) subject to further 25% on non-shares unit trust income

For Shares Based OEIC Dividend Income in 2024 Tax Year

Income can form part of your Tax Free Dividend Allowance £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