National Grid & Capital Repayment

inkjet

I have a few Nat Grid/Transco shares which are held in a PEP. Reorganisation means I will receive 65p per shares pay out. There are three options if I chose the first which is to receive the 65p now as a payment direct to my PEP. Will I get it tax free i.e. gross and then not be liable for any further tax as it is in the PEP. Or do Nat Grid deduct tax at source?.

TheDink

Doesn't the first option just treat the payout as a normal dividend payment, in which case it would be treated in the same way as dividend payments are currently treated within your PEP? My shares are held outside of a PEP and tax is deducted.

inkjet

Hi thanks for your reply. Yes it does and it does say "The Company will not withhold tax at source when paying the single B share dividend". So is it fair to assume if there is further tax to pay as a higher rate tax payer, this will have to be declared when completing the annual tax return to the IR. If this is the case then you too will be paid gross. The reason for the question was that there are options to take it as a "capital" payment which I do know will not attract tax within a PEP but there are other disadvantages. the Dividend way is the immediate payment which suits me better.