Dr Pepper special dividend tax implications

buddyfan

Due to the Dr Pepper merger last year in the US, I received about £12K 'special dividend' in lieu of the share reorg. I had previously signed the W-8BEN.

I will have received no income in the 18/19 tax year.

Is the dividend taxed as cgt or income? I thought income but then saw the thread " Taxation on US shares (Dr Pepper merger) "and answer #9 threw me. (sorry not allowed to post link as I'm new)

From HMRC website, I thought that £2K would be tax free and the rest taxed at 7.5%. Is that correct? Does that count towards my personal allowance as income and if so, how much - 10K or 12K or something else?


What are the implications of the special dividend being issued from the US?

londoninvestor

Here's the link to the thread: https://forums.moneysavingexpert.com/discussion/5859498/taxation-on-us-shares-dr-pepper-merger

In that thread, the US tax treatment is mentioned (by me in fact ) based on the SEC filing.

I don't know the answer to your question about UK tax treatment though, I'm afraid.

antrobus

This thread I presume;
https://forums.moneysavingexpert.com/discussion/5859498/taxation-on-us-shares-dr-pepper-merger

Post #9 states, inter alia;

The special dividend, as a result of the merger with Keurig, was $103.75 per share. It consisted of two parts:-

• A ‘normal’ Dr Pepper Snapple dividend payment of $29.50 per share, on which a 15% Withholding Tax was levied. Due to Double Taxation treaty, no further UK tax is due on this part (depending on your circumstances).
• A ‘special’ merger payment to shareholders of $74.25 per share which, according to my research, is treated in the US as a type of Property Sale. No tax was levied on this portion by the US authorities.

My understanding is that the second part of this special dividend is to be taxed in the UK under ‘Capital Gains’ rules.

If you have received about £12K in total, then it is a good bet that the CGT bit will be covered by your £11,700 CGT allowance, and if you have no other income in the 18/19 tax year, then there will certainly be no IT to pay.

sjh851

Hello - I was interested to read this thread and wondered how people are treating the Dr Pepper special dividend in their UK tax returns.

My brother and I both had some Dr Pepper shares which resulted in us receiving the special dividend. We understood the capital part of the dividend would be subject to CGT and the income part would be subject to dividend tax in the UK. However, my brother’s accountant seems to be suggesting that he declare the whole amount as foreign income subject to dividend tax on his tax form. I am about to do my own tax form and am keen to ascertain the correct position.

Do you know if there has been any definitive advice on this at all? I see that other people on the internet seem to be confused about this as well and am not sure anyone has reached a firm conclusion yet!

Any help you can provide would be much appreciated.