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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.
Thanks I’ve been told it makes no odds either way anyway
I think it is cash only payment
Hi is it too late to change your dividend election mines currently cash but am I right in thinking that if I change it to shares and leave them for 3 years in there that mitigates the tax or am I too late to change
Hi. This may be a silly question but i've not been involved in this type of consolidation before.
Am I right in thinking that the 15 shares held (rather than original 19) will be worth the same value as the original 19? Does that make sense ? Help anyone. Thanks
Thanks guys for your input and advice, i have just sold the max i can before i get hammered on CGT and will be opening a S&S isa going to put in £20k this yr and anther £20k in April. Thanks and i think its my time to get my fingers in other pies...????
CGT only applies to the shares you SELL outside of an ISA and after you have calculated any other dispoals that tax year ie possible losses and more gains and then you use your Cap gains Allowance £12,300 and then you can use losses from previous years too,( needs looking into) but after all those measures the rate of tax is 10%for basic rate tax payers and 20% for higher. this is as understand it of course.
dividend tax is 7.5% on income over £12.500 +2,000 dividend allwance , them jumps to 32.5% for higher rate.
Another first time poster here...really useful information and viewpoints over the last few weeks...and I'm happy with where I want to go with TSCO stock, however I notice on HL and WWW.dividenddata sites today the ex div date is stated as 15th Feb...? I had been working on the basis of ex div on the 11th Feb....I've clearly missed something somewhere if this is the case...?
Hi eye-wink, I'm in the same boat with some of the dividend attracting 32.5% tax, after taking steps to shelter a proportion of my shares in tax free wrappers. I've decided to sell my balance and avoid the tax hit and see how things pan out post consolidation. I hope that at last all the measures that have taken over the last few years will get the share up and over the £3 mark, where it should be, but I'm also conscious that post Covid, money may well shift from defensive to growth stocks. Time will tell.
Thanks for your feedback,,, due to the volume of shares, and the half year dividend, I have used up the £2k allowance and therefore the remaining amount is taxable at the tax rate that applies to you. For me, many of my shares came from previous profit sharing, SAYE etc for which the SP was higher, so the average SP for my holdings is higher than the current SP. As correctly pointed out by Pandy2, you do have a CGT which will help many people.
So, the question for many is do we expect the SP to stay static up until the 12th or to rise... this is what I am struggling to get my little brain to come to a conclusion on ( which will then help determine which of my choices I need to make ).
Is it in the interests of the institutions to buy more shares between now and the 12th?
Tax free in an ISA wrapper...
dont forget 2k dividend allowance too before any tax is calculated
Dividend is subject to income tax .
Not sure if relevant to this situation but remember you’re allowed I think £12300 profit before paying any cgt.
same boat as you, and ive been contemplating this very question in my mind for a while now, not staright forward is it? not sure my dividend tax will be 32.5% tho ....
Yet another newbee here, so please be gentle….
I have a large amount of Tesco shares outside of any tax free wrapper and will be subject to a 32.5% tax on the dividend ( I have already made use of this years ISA allowance as well as changing my SIPP to take shares rather than cash ).
As it stands at the moment, I have two choices for the remaining shares which are outside of tax free wrappers…
1. Keep them, declare the tax on the dividend ( which will help pay off the national debt ) and hope that the SP of the lower number of shares ( 15/19 ) climbs ( given the company is stronger, pension deficit reduced etc )
or
2. Sell them prior to the cutoff point, avoid the tax on the dividend and look for a buy back position if the shares drop post consolidation ( to place in next years ISA ). For this option, CGT shouldn't be an issue as the average price of my holdings is sadly higher than the current price.
Part of me suggests I should hedge my bets ( I have already sold some this week ) whereas another part of me suggests I should the sell the remaining ones over a number of days ( to average out the price ).
Would appreciate any thoughts you have, thanks in advance.
Yes Stocks and shares ISA would be top of my list. You currently get £20K a year so if you open one now you'll get this years allowance then another on 6 april. No tax return to fill in on the shares there and that'll be £40K shielded from CGT.
For colleagues, specialist explanations can be found from various Tesco and Equinit sources. The following is text pulled from yesterday's email.
"We have more information on tax in our detailed Q&A on Our Tesco, and in the circular sent to shareholders on 25 January 2021 and 2 February 2021....... There is also additional information on the Our Tesco web site....... If you have any further questions about your shareholding, please telephone the Tesco Shareholder Helpline on 0333 207 6381 from the UK or +44 333 207 6381 from outside the UK*. For questions on your share plans, please call the Equiniti helpline on 0371 384 2927 from the UK or +44 371 384 2927 from outside the UK*, or email myshareplan@equiniti.com. Telephone lines are open from 9:00am to 5:00pm (UK time), Monday to Friday, excluding public holidays in England and Wales"
Gunner. You read a lot on these boards that is complete rubbish but Pmoran has taken his time to write a very good response to your questions. It all makes perfect sense but I didn’t see where you said all the shares you own are with Tesco (probably my bad) but if they are then I’d seriously consider some diversification.
Just looked at what happened to all the people that have out their money into banks over the past 10-20 years! Good luck into whatever you decide. If you’re an Arsenal fan then I hope you loose all your money-just kidding, but I do hope you loose all your games. COYS.
Gunner. Nice holding you’ve built up there. I love share save schemes as a method of saving/investing.
My dividends are auto reinvested in my sipp, isa and general share accounts and usually the payment is received on dividend payment date or the day after and its reinvested within 48 hours.
As for the number of Tesco shares you are holding in shareview I would echo tenapenny’s thoughts. Currently you have all your eggs in one basket. I know people who worked at Centrica who took part in the share save schemes and failed to diversify given that the company was essentially as safe as houses and it cost them.
Not having an isa will cost you in the long run too. I would look at setting up a stocks and shares isa with a provider of your choice (ajb, hl, Lloyds etc) and then consider either selling some tsc and moving the funds into your new isa or if you still wish to retain the tsc shares look into a service called bed and isa that most providers offer as it lets you sell the shares and rebuy them in the isa wrapper immediately so you are less exposed to price increases/decreases.
I’m not qualified to give financial advice and even if I was I wouldn’t recommend you listen to anyone on an lse chat board anyway. But I would seriously consider doing a bit of research into why it makes sense to have a diversified portfolio.
You have a choice in most isa’s to hold etfs, funds, investment trusts and trackers and these can give you exposure to USA/Europe emerging markets etc. In fact some providers such as ajbell and Hargreaves even have products that do the whole balancing stuff for you selecting a basket of funds that meet you risk criteria although I personally prefer to do my own investing. There’s a lot of good quality info online but also most isa providers will have good information on their websites (available to read even if you don’t have a product with them). Make sure you understand the charges a fund or investment trust charge.
Even if you think Tesco’s is only going one way (up hopefully) and you wish to retain your full compliment of 21,000 shares one piece of financial advice I am going to confidently give you is to look into getting your existing shares put into an Isa. If you do choose one that does the bed and isa process they may require you to move your existing shares from shareview to them first (that’s just a transfer) before they can do to bed and isa. So act quickly because if you get the ball rolling now you will be able to put £20k into an isa under this years allocation (before April 5th)and put another £20k into the isa under next years (after April 5th). Like I say even if you leave all your shares with Tesco this is worth doing because there will be no future tax liability on dividends or shares sold etc.
Hope that’s helpful, good luck.