Unit Trusts and Open Ended Investment Companies (OEICs)

We are reviewing the advice given in relation to unit trusts and open ended investment companies (OEICs):

“These collective investments offer access to specific actively managed funds.

Currently any gains enjoyed up to encashment will be subject to capital gains tax (CGT), however you will be able to offset (either fully or partly) these gains with your personal CGT allowance. The annual allowance is currently £10,600, though you must bear in mind that tax benefits may be subject to changes in government policy.”

Our advice on the above:

Totally wrong.  The CGT allowance is currently £10,600 and also the adviser forgot to point out that you could use losses elsewhere to offset against gains made in a unit trust or OEIC. The adviser also forgot to explain that you have the use of both indexation allowance and taper relief making a unit trust arguably the most tax efficient investment vehicle next to an ISA.

Worldwide’s score: 1 out of 10

Tags: investing, OEICs, tax, unit trusts

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