Tax implications of dividends in form of shares

John_Gray

A well-known Scottish, but not recently taken over, bank has decided to pay dividends to share owners in the form of a small proportion of additional shares.

I can cope with declaring cash dividends on my Self-Assessment Tax form - but how on earth do you treat dividends in the form of shares?

Either a brief summary would be fine, or pointers to where to do further research.

Thanks!

cheerfulcat

Hi there,

RBS, yes? Info is on their website. This is not the same as a scrip divi - the capitalisation issue shares are simply added to your existing holding
-

Q22. How will the Capitalisation Issue Shares be treated for UK tax purposes? A. For the purposes of income tax, receipt of the Capitalisation Issue Shares should not result in a charge to tax as income, and will not give rise to a charge to stamp duty or Stamp Duty Reserve Tax.



For the purposes of Capital Gains Tax ("CGT"), the Capitalisation Issue Shares should be regarded as a reorganisation of the share capital of the Company. Accordingly, the Capitalisation Issue should not give rise to a charge to CGT. Instead, the existing Ordinary Shares held by you and the Capitalisation Issue Shares should, taken together, be treated as the same asset as the original Ordinary Shares, acquired at the same time and for the same price.



If you sell some or all of your Capitalisation Issue Shares this will, however, constitute a disposal for the purposes of CGT and may, depending on your individual circumstances, give rise to a tax liability.

Please note that neither the Company nor Computershare are able to provide tax information. For further tax advice you should contact your independent tax or financial adviser.

John_Gray

Thanks, O Cheerful Cat - just a matter of knowing where to look!

ffacoffipawb

cheerfulcat wrote: »

Hi there,

RBS, yes? Info is on their website. This is not the same as a scrip divi - the capitalisation issue shares are simply added to your existing holding
-

RBS isn't being taken over, it's HBOS, but I suspect the dividends mechanics is the same.

cheerfulcat

Ah, ffacoffipawb, you missed the subtlety in the OP -

A well-known Scottish, but not recently taken over, bank

Unless it's a typo for "now", of course...

John_Gray

No, 'twas RBS (or RBoS) t'which I was referring...! :T