ISA tax advantages

- D
- david
  
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posted
17 years ago

Tue, Jul 25, 2006 6:00 PM

I know that ISAs are free of CGT but I don't understand about the income. Gordon Brown abolished the tax-free status of dividends on equity ISAs but am I right in thinking the income from bonds funds is still tax-free? Also what about a fund investing in both equity and bonds? I have some units in Legal & General Combined Income Fund ISA but have no idea whether I am getting any tax-free income from it? What are the rules about what sort of fund qualifes for tax-free income? I've looked on the Inland Revenue website but can't find anything about this. Thanks David

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- J
- Jonathan Bryce
  
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posted
17 years ago

Tue, Jul 25, 2006 6:24 PM

There will be no tax on interest, but dividends will be taxed. Note that this is only at basic rate, so if you are a higher rate tax payer, then you will still pay less tax on dividends as a result of putting the shares in an ISA.

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