Self Assessment - Santander shares - no dividend?

scrub

I've got a few shares in Santander - less than 100 and I opted just to get new shares instead of a dividend. I'm not sure what to put on my self assessment. Any ideas?

jimmo

The usual arrangement is that you are still credited with dividends but instead of paying the money to you they keep the money to buy shares for you.

If that’s the case you should still get dividend vouchers, showing the amount of the dividend and the associated tax credit.

Use those figures to complete your Tax Return.

barak

scrub wrote: »

I've got a few shares in Santander - less than 100 and I opted just to get new shares instead of a dividend. I'm not sure what to put on my self assessment. Any ideas?

You needn't show it at all, but you should show the other dividends received in cash in May and August 2011. If your Foreign Income doesn't exceed £300, those can be declared on the UK dividends page boxes "5. Foreign dividends up to £300..." and "6. Tax taken off foreign dividends..." avoiding the necessity for completing a Foreign Supplementary Section.

With the scrip option you [and I] have chosen you will have received a statement showing the number of shares you have received and a small amount of cash for the fractional rights sold which were less than the value of a share. This is a disposal so is not subject to Income Tax.

The scrip option to take new shares avoids the [now] 21% Spanish withholding tax on the dividend and UK standard rate taxpayers should have no liability for UK Income Tax.

http://www.ft.com/cms/s/2/aa7e1a46-cb07-11de-97e0-00144feabdc0.html

John_Pierpoint

Unlike most UK companies, Spanish Santander tries to pay out something to its shareholders 4 times a year.

zygurat789

barak wrote: »

You needn't show it at all, but you should show the other dividends received in cash in May and August 2011. If your Foreign Income doesn't exceed £300, those can be declared on the UK dividends page boxes "5. Foreign dividends up to £300..." and "6. Tax taken off foreign dividends..." avoiding the necessity for completing a Foreign Supplementary Section.

With the scrip option you [and I] have chosen you will have received a statement showing the number of shares you have received and a small amount of cash for the fractional rights sold which were less than the value of a share. This is a disposal so is not subject to Income Tax.

The scrip option to take new shares avoids the [now] 21% Spanish withholding tax on the dividend and UK standard rate taxpayers should have no liability for UK Income Tax.

http://www.ft.com/cms/s/2/aa7e1a46-cb07-11de-97e0-00144feabdc0.html

According to the link there were dividends paid in November 2011 and February 2012, shouldn't these be included as well?

pjclar02

zygurat789 wrote: »

According to the link there were dividends paid in November 2011 and February 2012, shouldn't these be included as well?

Yes - even if the dividend proceeds were reinvested to acquire new shares. A scrip dividend is still reportable and liable to income tax if appropriate

John_Pierpoint

Before we ( I ? ) all get totally confused, the FT link quotes a well known chartered accountant saying the scrip "dividend" is not liable to [income] tax.

It is in effect a rights issue at zero price and if the impoverished shareholder needs cash, they can sell some of their company in the market.[and pay the CGT if any]

I used to have this battle with my late mother in law, she went to her grave firmly believing that a lovely board of directors had "given" her a bargain in the form of an opportunity to buy shares at a discount. When I tried to explain that as she already owned 0.0000000x% of the company now and after she had written a cheque giving her hard earned money to a group of shysters who had run out of ready cash, she would still own exactly 0.0000000x% of her company; I was obviously some sort of nasty red radical.

No money is flowing from your company to you; unlike the other two dividends, where you ask your company to use the money that it has given you, from which the "bankrupt" Spanish government has grabbed 19%, to buy an additional stake in your company from your fellow shareholders, who want to get out.


The company web site says much the same as the FT item but also warns that most UK shareholders got their original shares for nothing (ie at zero value).
Unfortunately the company download of the explanatory booklet is not available at the moment (overwhelmed by MSE tax payers Googling it?).


http://www.santander.com/csgs/Satellite/CFWCSancomQP01/en_GB/Corporate/Shareholders/Shareholders-UK/Santander-Scrip-Dividend-Scheme.html

Shareholders need to recognise that they can usually be milked at will by the board of directors having a rights issue. It was back in 2009, I forget which bank, but they had a rights issue; I decided that it looked like putting good money after bad.
I should have had the courage of my convictions and sold all my (free) holding.
The directors sold my rights for me and the sting in the tail, was having to pay HMRC some capital gains tax 18 months later.
[I had managed to offload (too late?) some other assets and so used up my £10k nil rate band]

pjclar02

Hello John

That is the distinction - it isn't a rights issue, it is reinvestment of a dividend. This is subjected to tax by s409-410 ITTOIA, however, only when paid by a UK resident company.

Presumably the shares are issued by Santander in Spain, in which case it is possible that they are not caught by this legislation.

John_Pierpoint

You don't understand no money has been paid out by the company, just because the UK government might try to tax such a transaction does not make it logical or moral, however it is obviously the sensible thing to do by a bank trying to meet the new Basel 3 regulations.
In boom times such a "dividend" probably has little effect on the share price and the UK government can get away with taxing the value of the "new" shares on their first day of trading and ignoring the loss of value of the other "old" shares.

This dates back to the days when capital was capital (designated in gold(*)) and income was from revenue - now it is all "funny money."

Legally the problem might be that no income/revenue money has left Spain until such time as an British resident shareholder chooses to withdraw his investment of capital from the venture?

I set up such a tax free arrangement for my late mother in the 1990's using a split capital unit trust. The right to income had been sold off and the managing company simply sold X% of capital units each month to create an extra couple of thousand per year of what mum regarded as income. Seemed like a better bet than buying an annuity at the time?

Perhaps this explains the non availability of parts of the Santander web site:
2013
Blackout period: January 16th to 30th



2013
Results webcast: Thursday January 31st

(*) Or silver if you happened to be Spanish:

http://www.bbc.co.uk/ahistoryoftheworld/objects/JO391t6cRtGxstjbE4EEmg

scrub

Thanks for all your answers!

I rang them and I don't have to declare them because they are a foreign bank and the tax is already deducted.

Cook_County

If you register for Santander's shareholder section on their website and log in it tells you to the penny exactly what to declare, when and how.