ISA helps New Star investors receive payments tax free

ISA helps New Star investors receive payments tax free February 15

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An intricate system of tax avoidance has been announced by New Star which means that investors in its bricks and mortar international property fund could receive income payments tax free.

The fund has been structured in a way that when property is bought or sold, it is the holding company that changes hands rather than the property itself.

This means that land tax and stamp duty payments are largely avoided.

Furthermore, a string of holding companies have been set up to act as further barriers between the properties and the fund, ensuring the fund receives as much income as possible but pays only a minimal amount of tax.

“UK retail fund regulations would make it very difficult for the fund to invest via these holding company structures. The FSA (Financial Services Authority) has, however, recently agreed a modification of the rules to make this practical,” said Stewart Cazier, New Star’s managing director of operations.

The fund pays out income as ‘interest distributions’, and if investors receive these within an ISA they will be exempt from tax.

Written Exclusively by AdFero for ISA Guides

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