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Rosewall
No worries the other bb is my alter ego. Take any of my comments on there with a large pinch of salt. It’s my guilty pleasure until travel restrictions are lifted and I can get out of the UK. ;)
Hi Leas,
Don't worry about it. This was posted on the wrong board, I thought we were in the other place where other things are discussed. I will leave this board for TSCO.
Rosewell
I have never denied or stated that the money doesn’t have to be paid back. All I’m saying is that it will not be overnight and all at once. Not sure if the point you’re trying to make.
Leas
Someone has to pay for the pandemic. I would prefer those more wealthy than the poorer suffering 50 years of austerity (the timescale that the Westminster government has said it would take). A combination of high inflation, higher taxes on earned and unearned income and much shorter term austerity will avoid / ameliorate the Great Reset.
Seems like the only gainers from this, are the brokers, with their sell and buy charges, and the taxman, don't think it will make much difference to me as I hold it in a Sipp, or will it ?
Seems all you posters after the rns were right...it's anchored in the 2.40 range like a carnival cruise ship in a pandemic
Sure :-
https://www.which.co.uk/news/2020/11/four-major-capital-gains-tax-changes-the-chancellor-is-considering/
I suspect now that more and more of us are trading shares because of awful returns on savings, then this seems entirely logical. It's nasty because we have already paid tax on the money when we earnt it and matters could be compounded by also cutting the ISA/Pension allowances too. Of course, if you have a final salary pension - no worries at all.
Furthermore, IF it does happen, it won't go away - a bit like vehicle tax that rises every year and when they lose out on that, they raise the idea of rod pricing.
Hopefully and I really do hope that wealth taxes are not introduced - that would take a fortune from us indeed.
More I think about it, difficult it becomes to make a decision. I did some calculations and looking at the scenario where the share price remains more or less the same after consolidation, dividend-tax won’t leave me enough to buy back to increase my shares to the original level. In fact, it will be way fewer shares. If the price increases after consolidation, the no of shares I could purchase with dividend leftover will be even less. The price therefore has to come down considerably to make it back to the original level. I am leaning a little towards unloading the shares before the 11th and look at reinvesting later; in Tesco or elsewhere or a combo of the two.
80% reduction of CGT. Can you post a link to that rumour? If that was true then it would take billions out of the market and the economy. The very last thing the Chancellor would want to do.
Of course tax rises are inevitable but not so draconian and at once. They will be phased in in-line with any recovery.
Hi Reader61, thanks for raising some excellent points....I am sure that these comments will be very useful to many others out there in the same predicament as us. I hadnt even thought about potential budget changes, but what you say makes perfect sense, the government has to claw back the money somehow. As you say it is a minefield and I feel that whatever I do will be wrong when I look at it with hindsight!!
Of course the SP wont dive after consolidation - that's the whole point of the consolidation - to keep the SP the same. Lockdowns , best online supermarket and staycations will keep this doing well ... plus some fairly chunky normal divvies this year.
Good to see SP threaten 250p again today.
Sorry Spindler but can't agree that the SP will drop after consolidation. Those that hold the stock for the SD will continue to hold the stock post consolidation, with the hope that the SP continues to climb. Otherwise there's no point on holding the stock at consolidation.GLA
Eye_Wink - some additional thoughts for you, as I am in the same position although a lower tax band one.
1. Speculation is the CGT tax free amount will be reduced significantly from the £12,300 currently enjoyed (rumour £2,000). CGT rates of Tax may also be aligned with income tax for the next tax year, thus 20/40/45% depending on your marginal rate vs the current 10/20% for basic/High rate payers.
If you sold now and made a CGT loss (you said your underwater on shares presently), I'm reasonably certain that loss can be carried forward into the next tax years (not sure how many years you can do so but believe it's multi year). The benefit being it should mitigate any future CGT gains from profitable sales of other shares/assets (property etc). Of course, this only applies if you become profitable on your folio of shares/assets and then you will be offsetting profits against a potential 40% future tax rate. It might be useful for example if you were to sell TSCO now and then buy back to avoid the dividend tax/share consolidation and to speculate on future gains in the shares.
2. If you take the dividend, your tax rates are either 7.5/32.5/38.1% once you exceed the £2K allowance. Again, it's highly likely these rates will be increased to align with income tax so you may be paying 40% in future on dividends rather than your 32.5% from this tax year.
3. Can you put any more contribution into your pension, eg if you moved the TSCO shares into your SIPP (or were to set one up)I think you avoid all tax until income is taken. You will of course pay tax on the income but by then you may be earning less and currently there is the 25% tax free lump sum which may also be under threat though?
So, it's a minefield and the tax situation is just speculation until the budget. Personally, as I can't move any more into ISA/SIPP this year, I'm going to take the 7.5% dividend tax rather than sell my TSCO which are currently profitable and would reduce my rather sad CGT loss position carried forwards from previous years.
Dunno if any of that helps/makes sense?
I like Tesco as a company and I want to still be invested but not getting in again yet...if the share price dives by the SD amount after ex div that takes it back to 200p...and with the share consolidation they are relying on the market to reprice the shares reduced share float back to around the 2.40+ range at least....does the SD and consolidation happen separately with a lag or simultaneously ? . If there is any sense in the world once Sd out of the way the way should be clear for the broker estimates to come to be ..I do see these being worth 300p or more NOW if it wasn't for SD & consolidation. ...but certainly once Sd etc over with....if Mr Market cooperates
Like others, it's the tax situation I'm not happy with in my trading account but for my ISA and SIPP holdings I'll be re-investing the divs.
I recently increased my holdings into my ISA and SIPP which are long term, and top sliced my trading account holdings today and invested elsewhere, for a better overall return I hope elsewhere, even if the SP runs up more to ex-div, IMO 260.
Spindler, in just over a week that wont apply and maybe they will start to climb up to the 300p range. Less shares in issue. EPS looking better and lockdown continuing towards Easter.
News from Kantar saying TSCO had maintained it's market share of 27.3% whilst Asda declines. You could argue that the sp of all supermarkets will decline as more restrictions get lifted going forward. However, there has been no big uplift in the MC's of the big four during the last 12 months so you would nit expect to see profit taking.
Not denying TSCO is a bit of a plod but in these uncertain times investors will look to a defensive stock whose earnings cover the yield. I do think £3 is a real possibility.
I'm just waiting now for sbry to overtake the tsco sp and tsco is the better company
These would be north of 300p if not for this SD and consolidation.
Gunner22
Vital to get some fingers in other pies.
It makes sense.
Over long periods of time individual companies , even apparently strong ones ,can fade away or even disappear.
Find the original FTSE 100 list to confirm.
Keeping by your eggs in one basket is an unnecessary risk. This is especially true when you have built up a significant holding which will be important to you later in life.
My opinion only of course but I think it will be a widely held one!
Thanks for the replies guys, appreciated!
Rafafan,
It is my understanding that all else being the same, the consolidation would have raised the price of the shares proportionately, so that 15 new shares would have been of the same value as the pre-consolidation 19. But as a hefty dividend is coming out of the money pool, the stock price post-consolidation won’t budge all that much. Say one has 19000 shares which at 1.42 each will be worth £26980 on the 11th Feb. On the 15th, you will have 15000 shares which at 1.42 will be worth £21300. You would have received a dividend worth £9676.70 payable on the 26 February. So you might come marginally ahead but remember the tax bill for the dividend. I am speculating on the price a little bit as it might shoot up close to the 11th and then pull back. I don’t think the amount of dividend will change, no matter what the price. It is fixed at £0.5093 per pre-consolidation share.
Hi Gunner,
If you want to move your Tesco shares into a stocks and shares ISA, your £50k investment would need to be moved across 3 tax years as you are allowed only £20k tax free ISA allowance each tax year (from 6th Apr to 5th Apr following year).
The link below provides an explanation from AJ Bell on how its Bed and ISA works. Effectively you are selling your shares and buying them back into the ISA account. You will only be able to buy investments in your ISA up to the value of your unused ISA allowance for this tax year
https://www.youinvest.co.uk/isa/bed-and-isa#:~:text=What%20is%20a%20bed%20and%20ISA%3F%20A%20bed,so%20there%20is%20less%20exposure%20to%20market%20movement.
Another thing to note is, you may be realising gains/profits on selling your Tesco shares so there may be capital gains tax to pay. The first £12300 gains/profits are tax free for this tax year. But it depends on how you acquire the shares in the first place (via Share Incentive Plan SIP, Save As You Earn SAYE) and how long you have kept the shares in your name.
The below article gives a good explanation on Capital Gains tax
https://www.which.co.uk/money/tax/capital-gains-tax/capital-gains-tax-on-shares-ambbh8b4kuxt#:~:text=When%20you%20get%20employee%20shares%20from%20a%20SIP,the%20shares%20%28but%20no%20relief%20for%20losses%20either%29.
https://www.which.co.uk/money/tax/capital-gains-tax/capital-gains-tax-on-shares-ambbh8b4kuxt#:~:text=When%20you%20get%20employee%20shares%20from%20a%20SIP,the%20shares%20%28but%20no%20relief%20for%20losses%20either%29.
Hope the above helps.
Rafafan
Not quite. The 15 shares will represent the same proportion of the business as the original 19.
Ms01ma not too late if you change to drip the special dividend will be reinvested accordingly .
Thats the Tesco boards plan, but you never know whats going to happen
There is over 9billion shares out there and major players too, holding millions.