Units trusts held in general investment account and tax

This is my understanding. I've based it on... https://www.gov.uk/apply-tax-free-interest-on-savings https://www.gov.uk/income-tax-rates https://www.gov.uk/tax-on-dividends https://www.gov.uk/capital-gains-tax/rates If person A is retired with the state pension as their income. This is less than the personal allowance of £12570. This means they qualify for £5000 starting rate allowance. Untaxed interest from banks, building society (financial institutions), unit trusts held within a general investment account (not an ISA) would be part of the £5000 SRA and therefore if the SRA is not exceeded then there is no tax to pay on their untaxed interest. Person A inherited some unit trusts held in a general investment account. If dividends from unit trusts held within the general investment account (not an ISA) exceed the £1000 dividend allowance, then because person A is in the 0% income tax band, they would pay no dividend related tax on anything in excess of £1000. If there were capital gains from selling the unit trusts held within the GIA (not an ISA) exceed the £6000 cgt allowance, then because person A is in the 0% income tax band, they would pay no cgt related tax on anything in excess of £6000 The GIA is with an investment company, for example, Fidelity. Fidelity being a financial institution will inform HMRC of untaxed interest generated within the GIA at the end of each tax year. HMRC will use the information to modify the persons tax code, if required. Are all my statements correct? If not, please tell me why not? Personally, I think the best course of action would be to move the funds from the GIA into an ISA. My clarifications would then become irrelevant.

Hi,

If a persons total world-wide income, including dividends, interest, pensions etc, is below £17570.00, then they are entitled to the starting rate allowance of £5000.00.  

If their income exceeds £17570.00 by £1.00, they do not qualify for the £5000.00 staring allowance as they will be basic rate taxpayers and only able to claim £1000.00.  The first £2000.00 of dividends are free of tax.  

Any dividends above this sum, will be subject to tax, where there is no balance of personal allowances to cover them.

Capital gains tax is a separate tax from income tax and the two do not mix.  In the current tax year, an individual is entitled to claim £6000.00 annual exempt allowance.  

Any onused personal allowances cannot be set against a capital gain, so any gain above £6000.00 in 23/24, would be subject to capital gain tax.

Thank you.

Thank you for your reply. A few clarifications, please.... If total income is less than £17,570 and dividends income is £3005, then the £1005 in excess of the £2000 dividend allowance would be taxed at 0%. Is this correct? I suppose it is covered as part of the SRA. Are fund platforms such as Fidelity, classed as financial institutions and therefore report untaxed interest and dividend info to HMRC? Thank you

Hi,
The £17570 is in relation to interest only and not dvidends. If your dividends are over the tax free threshold then you would be liable at whatever your tax band is:
Tax on dividends
Thank you.

Thanks, So, if no tax is paid on income, but the dividends are £3005, which is £1005 over the £2000 dividend allowance, then what is the dividend tax rate applied? The link you provided covers "basic rate", "higher" and "additional". It doesn't cover anything less than "basic rate". Regards

Hi
If you then have enough allowances to cover your income then no tax would be due on the £1005.
If your income takes you above your allowances you are then classed as a basic rate taxpayer.
Thankyou.