Return of Cash to shareholders

aspiration_2

Could someone please explain the difference between the various options ? - When to receive as an income and under what circumstances as capital.

fozzeh

Depends on the company and the terms of the offer.

Your broker should have sent you the relevant information upon their notice.

uknick

Is this to do with Persimmon?

aspiration_2

This is about REXAM

uknick

I've got Persimmon shares that are due to pay cash back in a couple of weeks and was offered the choice of income or return of capital.

From what I deduced, and I stand to be corrected on this, is that it is to do with income tax and capital gains tax. I assume shareholders have a preference as to which type of tax they wish to incur a liability.

I chose income, but as my shares are in a S&S ISA it is probably irrelevant as both choices are tax free, if my deduction was correct.

xylophone

http://www.rexam.com/index.asp?pageid=894

You have read the above?

aspiration_2

xylophone wrote: »

http://www.rexam.com/index.asp?pageid=894

You have read the above?

Yes, I have read this.

In an ISA it is unimportant.

However, outside ISA, not sure about income/capital position. I'm an infrequent seller of equities.

IronWolf

Its almost always better to go capital. Capital gains tax is 18% or 28% and income tax is 20% or 40%.

You also get the CGT allowance, usually you will have already used the income tax allowance.

Biggles

IronWolf wrote: »

Its almost always better to go capital. Capital gains tax is 18% or 28% and income tax is 20% or 40%.

Agreed, though it does depend on the OP's circumstances.

If the capital gains allowance of £10,900 isn't already being used, then there would be no CGT to pay.

But, on the other hand, the dividend option is net of basic rate tax, so there would be no additional income tax to pay unless the OP were a higher-rate taxpayer.

So in practice it probably won't matter which you do.

IronWolf

Ah yes forgot about the dividend coupon.

How do dividends work when the company is listed on LSE but registered abroad? I have some in Cyprus who have no withholding tax but not sure if I should pay income tax on it

aspiration_2

IronWolf wrote: »

Its almost always better to go capital. Capital gains tax is 18% or 28% and income tax is 20% or 40%.

You also get the CGT allowance, usually you will have already used the income tax allowance.

Thanks IronWolf.