Investment Trusts

These are companies that buy and sell shares in other companies. When you invest in an Investment Trust company you become a shareholder of that company. Your shares will rise and fall according to the supply and demand.

They allow you to lower your risk by investing in many companies. Unlike OEICs and Unit Trusts, an Investment Trust is "close ended" so regardless of the number of investors the number of shares does not change.

The investor is taxed as is any other share with a dividends received with a tax credit of 10%. Non tax payers can not reclaim this tax, lower rate and basic rate tax payers have no further liability, while higher rate tax payers are liable to a further 22.5% on the grossed up dividend.