Tax treatment of Closed End Funds/Investment Trusts

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RiceCakes

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I've not been very successful researching this on the Revenue.ie website, perhaps I'm just not looking in the right places.
I have two questions really:

1) At disposal, gains/losses are treated as per CGT as opposed to income tax like in ETF's - correct ?
2) Losses can be offset against gains - not sure about this, can i set a loss from last year (assuming the loss was realised on sale of a CEF) against a gain this year, is there a time limit?
3) Deemed disposal, same rules apply as for shares?

Anything else I should be concerned/need to know about when buying CEF's in particular from a taxation perspective?
Many thanks for any advice anyone can give.
 
Risk factors Risks applicable to investment companies

  • The value of your investment can fall as well as rise, and it may be affected by exchange rate variations.
  • The various classes of securities issued by Investment Companies have varying levels of risk and are only suitable if you have sufficient resources to bear any loss which might result from such an investment (which in some circumstances may equal the whole amount invested).
  • You should consider investments in any of the various classes of shares issued by the Investment Companies as a long-term investment, and remember that they are subject to normal stock market fluctuations and other risks inherent in all investments. There can be no guarantee that the full value of the Company’s investments would be realisable in the event of a sale.
  • Past performance should not be seen as a guide to future returns.
  • The market prices of the various classes of shares issued by the Investment Companies on the London Stock Exchange may not reflect their underlying Net Asset Value.
  • Quoted and projected yields are for illustrative purposes only and are not guaranteed.
  • The current favourable tax treatment of Investment Companies for certain investors resident in the Republic of Ireland may not be maintained and may be subject to future government legislation.
  • The current tax regulations for Investment Companies may be subject to change and may be subject to future government legislation. Note that some investment trusts are domiciled outside of the UK e.g. jersey and an entirely different tax treatment could apply to that which an investor is expecting
  • Certain share classes and/or Investment Companies are geared, which could be in the form of flexible bank borrowing (financial gearing) or through the issue of Zero Dividend Preference Shares (structural gearing). Due to the nature of financial gearing, shareholders will be exposed, in an exaggerated form, to any outperformance or underperformance of the Company assets, relative to the cost of any borrowing. As a result, you could get back nothing at all if a fall in value is sufficiently large. With structural gearing Zero Dividend Preference Shares are usually first in line to receive their share of assets at wind up.
  • Those holding shares that rank after the Preference shareholders will only receive a share of the remaining assets and could receive nothing.
  • When an Investment Company is launched a target size is assumed which may not always be achieved. If its assumed size is proportionally not achieved, the charges and expenses allocated to the investment may be higher, and the value of the investment may consequently be reduced.
UK Inheritance Tax
Investment companies domiciled in the UK are subject to UK Inheritance tax at a rate of 40% for portfolios in excess of the nil rate band currently £325,000 (tax year 2017-2018).
Under the terms of the double taxation treaty between the UK and Ireland, tax is based on the following principles; where the property is not situated (in this instance Ireland) gives a credit and the jurisdiction where the property is situated taxes.
It should be noted that any UK Inheritance Tax payable is not deductible as a liability in calculating the amount of CAT payable - it can only be used as a credit against CAT in Ireland only when the same property is taxed in both countries.
 
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When I was researching this subject I made a table to help me a few years ago.

Key Post - Summary of Stock Market Investment Costs

I have summarized by way of a table what I think are the main costs involved in investing on the stock market. Please let me know if there are any errors in this table, or if there needs to be anything added or removed.
www.askaboutmoney.com

I don’t think much has changed in the last few years except for the fact that US domiciled ETFs are no longer easily accessible through online brokers.
Also I called investment trusts “investment companies”
 
Marc said:
It should be noted that any UK Inheritance Tax payable is not deductible as a liability in calculating the amount of CAT payable - it can only be used as a credit against CAT in Ireland only when the same property is taxed in both countries.
Click to expand...
I'm really struggling with this sentence.

My understanding is that a credit (offset) is available from CAT in respect of any IHT paid in the UK. How does that not reduce any Irish CAT liability?

Also, you don't appear to have answered the OP's questions!

@RiceCakes

Shares in UK investment trusts are taxed like any other shares - the normal income tax/CGT regime applies.
 
Many thanks all, thats very useful information.
I assume that if they are treated the same way as regular shares then deemed disposal rules apply also. That said I'd like certainty on that point so have submitted a request to the revenue to confirm/clarify.
 
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