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Geng to make it clearer when a company pays a dividend out of distributable reserves it is not a return of capital but is a distribution out of realised profits so an income distribution for the company and an income receipt in the shareholders hands.
AGE
Geng when a company pays a dividend then it is income for the shareholder and a distribution out of realised profits for the company.
A company is only allowed to pay a dividend if it has sufficient distributable reserves to do so otherwise it is an illegal distribution.
When AMC sells its subsidiary which owns the Kun Mane development it will make a capital gain on the disposal and so it will have sufficient distributable profits to pay the 1.80p special dividend.
The dividend paid to the shareholders is going to be income and you pay income tax on dividends if not held in an ISA and the dividend is larger than 2,000 and you are a 40% or 45% tax payer.
If it is structured a different way then it is a return of capital and then you do not have an additional amount of tax to pay if you are a 40% or 45% tax payer.
As a dividend is income it does not reduce your tax base cost but if it is a return of capital then it does reduce your tax base cost.
You cannot just call it a special dividend to make it a return of capital you have to structure it in a certain way to make it a return of capital.
AGE
Agneissearner, if the dividend is classed as a return of capital, which it will be (what else could it be) then there is no dividend tax to pay. If its being deemed a return of capital for the company, then why wouldn't it be for the shareholders.
There may be capital gains tax depending on how much you make, if you bought at 0.7 to 0.9p for example. As I said before, if you then sell the remaining holding (at a loss) you can mitigate any capital gains tax.
The deadline to vote is 10am tomorrow!
I was expecting the voting to appear on the Corporate Actions section of my trading account.
I only found out today that because AMC is an international AIM share as it is domiciled in the BVI then it is not covered by the EU directives meaning that brokers do not have to operate a corporate action!
AGE
As I keep on posting go and look at how Fuller Smith & Turner PLC structured their special dividend using a D share scheme as they already had A, B and C shares so they created a new class of shares called D shares they then allotted those shares and immediately bought them back and so for tax purposes the special dividend was treated as a return of capital and hence not taxable.
AGE
Geng you are wrong!
There are interim dividends and final dividends and then there are non recurring dividends called special dividends and all of these are treated as income receipts.
The tax rules re dividends for Companies and individual shareholders are completely different as Companies do not pay corporation tax on dividends but individual shareholders may or may not pay tax dependant upon the size of the dividend that they receive and whether they are a 20% or 40% or 45% tax payer.
Just because the tax advice says there is no tax on the sale of a subsidiary company does not automatically mean there is no tax for the individual shareholders.
Search on Google using Penon Group frequently asked questions and you will see that it says the special dividend is treated as income and subject to income tax subject to the individuals circumstances.
Unless AMC set the payment of the special dividend up in the correct manner then we will be subject to income tax and not a capital return.
AGE
Thanks for the correction Tricky although 10 years is a long time constantly loosing men and costing Money, the Russians are not in any rush to leave the Ukraine, what were you doing in Afghan, i have only been there on Operations?
It came up in my voting mailbox on both my accounts once I asked them to add it. Thought they may have done it across the board for all their clients!
I didn't have any difficulty with iii, simply phoned them up, said I wanted to vote yes and asked for email confirmation that my vote was submitted.
Took about 5 minutes
Its tricky to get these people to vote for you as your proxy. There is a way. Vote closes at 10am tomorrow. IB is open later so please vote yes. Want help in how to make a ticket?
"Have spoken to one of my brokers and they say as long as they receive the special dividend as a return of capital there will be no tax to pay."
Sorry meant to add, as long as there is no 'Capital' gain above £12k per holder, in any case if there was, you could just sell some shares (which would be at a loss) to mitigate the gain down to the £12k
Not really sure what it would be classed as other than "a return of capital" there are only three categories of special dividend and the only one that fits with this is 'Return of Capital".
Have spoken to one of my brokers and they say as long as they receive the special dividend as a return of capital there will be no tax to pay.
I think it's fairly safe to assume that the personal dividend will be given the same status as the payment to the company so although the advice was for AMC the same will apply for shareholders.
normster
Wrong. The Russians were in Afghanistan for 10 years, from 1979 to 1989. I know that dates only too well because I was in Kabul in 1979.
TDT
etank- the Russians were in Afghan for around 20 years so they are quite persistent, Putin will not want to lose face and so backing down is not really an option
Indeed but if it is an ISA then you do not get the benefit of the capital loss but no tax on dividend if it is income.
If the shares are held in a trading account that is a non ISA account which is what the majority of people will have then absolutely crucial that the special dividend is a return of capital and not income.
How many AIM shares end up being profitable so that it is advantageous to hold in an ISA?
AGE
Geng,
Totally agree - Russia can not win this in the long run.
Not economically and not militarily, as both are interconnected.
Question though therefore how long is long?
However long, any invaded nation will put up years of resistance........there will be a stalemate and negotiation at some point.
That advice is about the tax treatment for AMC and not shareholders!
Soaking up all the sells, expect another big declaration at COP today.
Remember that if in an ISA or SIPP it will not be subject to tax. DYOR
.."The Company has received tax advice that the Disposal is unlikely to attract capital gains or withholding tax....
yes ive seen that.
Is the special dividend return of capital or dividend income (attracting 50 to 45 percent tax even though you may have made a loss.) If it doesn't attract capital gains, it will attract dividend income tax some will pay tax on the money they receive, 40 percent maybe, and when sell the rest have a huge capital LOSS, ie, lose money on a share and also pay tax on it.!!!!
This for long termers with averages above 3p who are paying tax and not in pension or isa
Well said TDT,
Also Russia is one of the richest countries in the world as far as natural resources go but the population see none or very little of it, just Putin and his pyramid of Oligarchs. They have no chance of holding onto ground in Ukraine they simply don't have enough forces to man-mark the Russian hating Ukrainian population.
I was watching a defence expert talking a while ago and he was saying that in a non aggressive control situation (UN etc) you need 1 solder per 24 of population to maintain control, in an aggressive militia situation it's as many as 1 solder per 8 of population - Ukraine has a population of circa 40M, Putin and Russia have no chance but won't back down, so War will go on for a long time.
TDT,
Great post - puts things into perspective.
From the last RNS....."The Company has received tax advice that the Disposal is unlikely to attract capital gains or withholding tax....
But it was humiliated in Afghanistan as was the West. What you want and what you get are not the same thing.
"He will not let mother Russia, something he holds dear, to be humiliated....."
Putin doesn't hold Russia dear. Russia is nothing more than the vehicle he uses to satisfies his megalomaniac tendencies. He and his cronies have done nothing other than rob the country blind and left the vast majority of its population in grinding poverty. How can a country the size of Russia with a population of almost 145m people have a smaller GDP than the city of New York if it's not being robbed and mismanaged by its successive leaders.
If you look at the occasions when one country has invaded another and tried to retain control of the land it has seized it rarely, if ever, ends well for the invader in the long run.
TDT
From the last RNS....."The Company has received tax advice that the Disposal is unlikely to attract capital gains or withholding tax....