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How Are Profits From Etf's Taxed? As Capital Gains?

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I bought some ETF's recently and noticed I did not have to pay stamp duty ON them as you normally do with other stocks and shares. Does this mean that ETF's are also taxed differently? Are the gains exempt for the first 9K or so, as per capital gains tax?

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There is no stamp duty when buying foreign companies (including offshore companies incorporated in the Channel islands, Ireland, etc.) - the same exemption applies to buying into ETFs. There is no stamp duty to pay when you buy units of the ETF.

However, the ETF will have to pay the stamp duty on any purchases they make. So if you buy a FTSE tracker, then whenever the fund creates more ETF shares by buying shares in Tesco, BG, etc. then stamp duty will be charged on those purchases, the money coming from the fund's 'management fee'.

Sales of ETF shares are taxed in the same way as other shares - you pay CGT on any profit you make, after your annual allowance, and any allowable capital losses. Dividend income from ETFs, again is the same, it's taxed as dividend income (which, is for practical purposes, the same as other forms income).

When held in an ISA, there are no tax liabilities, and no tax allowances - so a capital loss on an ISA, cannot be used to offset capital gains outside the ISA.

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