Investment Trust JGGI.L is listed in your article but not in detail. Being an income trust paying 4% annually which invests primarily in growth stocks. It’s policy is to sell it’s growth stocks to pay a 4% dividend. It has also recently beaten passive developed world indexes and recently trades close to NAV.

So is JGGI.L ideal for being held in a UK Ltd Company? (My thinking is that the annual 4% is received tax free annually within the Ltd company – over time this will compound nicely tax free and can be re-invested)

For companies, the gain is subject to CT

I believe gilts are subject to ct only on the interest payments but not on capital gains.

Dividends are not subject to corporation tax when received from UK equities and a long list of qualifying territories. Here is the HMRC manual reference and the list of countries: https://www.gov.uk/hmrc-internal-manuals/international-manual/intm412090

Similarly, funds also qualify, as long as they have got ‘reporting status’.

Dividend tax comes after withholding tax which may apply in the foreign country, so there’s that.

Yes, gilts are subject to corporation tax, sadly!

Hi there, thanks for your kind words.

The tax treatment is the same between income and accumulation funds. The only difference is whether the dividend payment is automatically reinvested (accumulation) or distributed (income).

Technically, an accumulation fund opens a new position every time a new dividend payment lands. And yes, you can account for the dividend instead of paying the CGT on the entire profit.

An income fund is easier for tax reporting though, because you clearly know what you received. So pick your battles ;)
Michael

I am at the early stages of investing some of my company excess cash as opposed to taking out of the company. Although I understand that dividends from the funds invested in are not subject to CGT or corporation tax I am not at all clear how this works in an accumulation fund i.e. the dividends are automatically reinvested within the fund, with many funds seeming to have both Acc and Dist variants. Is the total treated as CGT on selling the fund or can we account for the dividend wrapped up in the fund. I thought about just manually reinvesting the dividends but more effort if can just buy Acc fund. Apologies if this is a silly question. Thank you again for the content.

Hey RJ, REIT dividends (PID) are sadly subject to corporation tax! Sometimes REITs pay ordinary dividends, but that’s unusual.

See here: https://www.foxymonkey.com/uk-reits/

Does anyone know if income from REITs (ie PID dividends) are subject to corporation tax if you invest in REITs via a limited?