ISA platform bonuses ‘under tax threat’
According to The Times, online fund supermarkets rebate some or all of the investment charges that would normally go to advisers via commission.
Last month HM Revenue & Customs (HMRC) started to levy income tax on fund units and cash rebates paid by platforms, but excluded tax-free wrappers such as ISAs and self-invested personal pensions (SIPPs). When a rebate is reinvested back inside the wrapper it is not taxable, the report said.
However, HMRC said if the rebate is paid into another account it is likely to be taxable – meaning rebates on ISA savings could be at risk for investors who use platforms.
The paper said the “tax grab” would only last for a year due to the Financial Conduct Authority (FCA) ban on rebates from April 2014.