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What taxes do I need to be aware of?
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Unit trusts and OEICs are taxed in the same way as the underlying investments which the fund holds, whether cash, corporate bonds or shares. You will receive a statement each year showing the dividends and interest your investment received. This should be declared in your tax return. 

Capital gains tax is also payable whenever you realise a gain over the annual exemption limit (£8,800 for the 2006/2007 tax year and £9,200 for the 2007/2008 tax year). The gain may also be reduced by other reliefs, depending on how long you have held the investment.

                                                                                                                                                                                       
If you hold unit trusts or OEICs within an ISA or PEP then all gains and income are tax-free. PEPs are no longer open to new investments but you can still hold your existing PEP investments.
 Interest IncomeDividend IncomeCapital Gains
Tax paid by Fund
FundPays 20%Treated as having paid 10%0% if an FSA authorised fund
Tax paid by the investor:     
Non-taxpayerCan reclaim 20% of tax paid by fundn/aMay be liable for capital gains tax
Low rate taxpayern/an/aMay be liable for capital gains tax
High rate taxpayerLiable for an extra 20%Liable for an extra 22.5%May be liable for capital gains tax
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