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Taxing thoughts

Answered by Andrew Merricks
13 September 2007 [0 comments]

Q: 

I am interested in investing in exchange traded funds (ETFs) and holding them within an ISA wrapper. As the funds that I am considering seem to be based in Dublin, what is my position regarding income tax? Do I need to enter details of these funds on my income tax form if I hold them within an ISA wrapper?

Brian Peters, Carlisle

A: 

The funds you are referring to are listed on an EU exchange, so within an ISA you have no further income tax or capital gains tax to pay. Also remember that anything held within an ISA does not need to be mentioned on your tax return form.

However, if you are considering investing in ETFs, you need to satisfy yourself of the role of a passive fund in your portfolio. Remember that you will not have active management with an ETF, and although there are times in the investment cycle when this can be advantageous, there are other times when it will not be.

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