London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
Surely this seems to good to be true.
S/P 250p for rounding sakes..
If I hold 1000 shares
I will get £500 pounds for free and 1000 shares.
Where is the catch??
the shares you own will consolidate so It is too good to be true, the dividend is wiped out. Because for every 19 shares you own they will change them to 15 when consolidated. And even worse if you have used your £2000 tax free dividend allowance for the year you will pay tax on the dividend that you get.
so the way i read this i am no better off
Only if the share price in general increases the same as any other trading day.
so the way i read this i am no better off
Yes that's the conclusion I came to. And worse off if you hold outside an ISA or sipp. Can't understand why the FT call it a bonanza. Not for PIs, possibly for instructions but no idea on that one.
Institutions ...
fwiw, I think the sp is being held back on the run up to the GM and then once consolidation occurs the instructions that are are not wanting the tax headache will buy in heavily lifting the price closer to £3.
Normally wrong but just my thoughts.
Quel
You imply that there are tax benefits from holding dividend producing shares in an ISA or SIPP. I was on the gov.uk web site and noticed this page "https://www.gov.uk/tax-on-dividends". It mentions ISAs but not SIPP. I had a brief look at the Personal Pension pages on the gov.uk site but can't see anything. Is the dividend tax free in a SIPP (I thought it was but can't confirm that).
If they had paid down debt or bought back shares to reduce the free float I think this would have had legs towards or beyond 300p. Can't see that now until after the dust settles. Why the need to make it complicated ? I personally do not like consolidations, if you want to reduce shares in the market buy them back(especially when you have billions sitting there doing nothing), don't reduce my holding in the hope the market revalues them positively. I get you still have the same slice of the pie before but that cuts no ice with me !
Hi Rosewall
Apologies for hijacking your thread, but your question caused me to look at the issue of paying tax on SIPP covered dividends. The following is from expertpensionclaims.co.uk but similar answers came from other sources also.
"4. Are SIPP dividends tax-free?
SIPP dividends are tax-free. For whichever investments enable paid dividends, the income tax paid will be reclaimed by your provider and then returned to your account. "
I hope this helps.
SIPP is tax free, i've recently had that answered by HL. Drawdown pots are also free I believe, until you start to draw income from them which will be at your rate, eg 20/40/45% .
The net of this is we will have to pay tax at 7.5% or 28% (lower or higher rate taxpayer)on the dividend above £2,000 (don't forget to add in other dividends received in the fy). So outside of ISA/SIPP we have an immediate tax liability however, if you sell your holding after the consolidation then effectively you originally paid more per share so your CGT is less if you are above the yearly limit , £12,300 I believe?
BE WARNED - Ricci is probably going to hammer us all in the budget so I'm expecting dividend tax to rise in line with income tax and CGT to be reduced substantially. The income tax increase won't affect us as the divi is in fy 20/21 tax year but the CGT change will probably affect most of us outside ISA/SIPP envelopes.
Might make sense for those holding outside an ISA/sipp to sell now and buy back after the consolidation. This would avoid a divi tax but you may have a capital gain to deal with. If your gain is less than £12k allowance and you are not using this for something else then doing this might make sense.
I was holding Tescos in my SIPP and ISA, I am not going to be any better off after the payment, It isn't free money, The number of shares will be reduced in order to maintain a high SP and i would need to reinvest that money to get my holding of shares back, Its all a con.
I have sold my Teco shares in my isa incase the SP drops of the the EX Div date when people will have got the dividend and i might buy in on any drops but i am holding the tesco shares in my SIPP.. Either way, Its 50/50 bet
Effectively this is a bureaucratic nuisance which for those outside sipp/isa forces a tax/CGT event.
I cannot see the point, which they have not explained and I'm amazed in a world competing against Lidl/Aldi/Amazon/Ocado they can't find a better use for the cash. It feels like a lazy board to me.
Reader61 and SB4132
Many thanks regarding your comments dividend tax and SIPPs. What you say is what I have always thought, it doesn't make any sense to do it any other way. It was just that I could not find anything at all on the gov.uk web site and they are usually very good with their information.
Very welcome Rosewall, these forums can be useful and show the power of shared experiences. I am always learning from others on various boards, although sometimes they get hijacked, but so far so good with this board.
If you’re looking short term then it is a gamble holding if buying at this level. (Those liable to pay tax) You would have to hope the sp climbs closer to 2.60.
However, if you are a little forward thinking then buying at this level could be prudent, especially with market sentiment and the pandemic.
TSCO is restructuring debt, reducing pension costs and geared up online and home delivery. Booker will also benefit when hospitality opens up again. Clearly from selling a loss making business in Asia and Poland. Also the GM meeting it is proposed that TSCO can purchase their own shares.
The company are clearly cutting outgoings and looking a little ‘leaner and meaner’
Reduced number of shares after consolidation and a better EPS. Also with a healthy dividend institutions will be looking to invest in ftse companies that will cover their annuity costs.
Good luck to all investors whatever you decide to do.
DYOR as the saying goes...
When a dividend is paid the share price falls by roughly the same amount. In essence, your capital has been reduced but you have the difference in your pocket in the form of income, eg the dividend.
The intention of this consolidation is to keep the share price roughly the same as today ( I do not know why but hazard a guess later?) To effect this and erase the drop they give us 15 shares that remain at current price, say £2.40 for example rather than the 19 shares at £1.90 they would have been after the dividend without consolidation.
However, you are not better off because if they did nothing and didn't pay the dividend you would have had 19 shares worth £2.40 each or £46 roughly but you now have 15 worth roughly £36 but you do have the difference of ~ tenner in cash from the 50.3p dividend. Then you have dealing costs to re-employ this capital into the market along with tax costs if outside ISA or SIPP - this is definitely not a bonanza and the press should be hauled over the coals for describing it as such, it gives us shareholders a bad name.
However, it's unlikely the regime will now become more generous moving forward, what is more likely, is they will reduce the overall dividend pot by paying the same pennies (3-4p?)on the share when you had 19 but now on your new 15 shares.
Not sure i've explained very well but all the best.
***kin robbing barstewards I'm going to rob the trolleys that still have a quid in them from every store.
You not seen the advert where the young girl gets the £1 then?
Nat West, that was good, I must it admit to being chuffed to bits when I bag a quid from a shopping trolley.
£1 is a profit
You have explained it well Reader61, just an additional note (apologies if already covered) if you don't hold these under an ISA wrapper you will have to pay additional tax on any dividends you recieve over £2000 ( dividend income is separate from your capital gains tax allowance). The majority here will be aware of this but there is no harm in repeating if it helps.