Tax, fees & accounts
Income tax on investments
Tax on dividends and interest, usually charged in the year received.
How it works
Dividends and interest are typically taxed as income rather than as capital gains, often at different rates and with different allowances.
This is why the same underlying return can be taxed very differently depending on whether it arrives as income or as price appreciation.
Related terms
- DividendA cash payment a company makes to its shareholders out of its profits.
- Withholding taxTax deducted at source by a foreign country before a dividend reaches you.
- Capital gains taxTax on the profit made when you sell an investment for more than you paid.
- Tax wrapperAn account type that shelters investments from some or all tax.
Mentioned in
More in Tax, fees & accounts
- Platform fee
- FIFO and other lot methods
- Stamp duty
- Currency conversion fee
- Tax-loss harvesting
- Average cost
- Wash sale
All 11 Tax, fees & accounts terms · The full glossary, 433 terms
Educational reference only. Nothing here is investment advice or a recommendation to buy or sell anything, and tax treatment depends on your own circumstances and the country you are in.