Member Info for MikeM14

Hi POLOMan,
If I'm understanding your question correctly, you're asking about income tax paid on dividends. You're allowed to have £2,000 of dividends a year free of tax (so you're only taxed if your total dividends in the year - Tesco and everything else combined - exceeds £2,000. Then, if you're a Basic Rate taxpayer, you pay tax of 7.5% on just the bit of dividends that's above £2,000. Dividends from shares are now paid gross - it changed a couple of years ago (April 2016) before which they were paid net (ie tax had already been deducted). If you're a Higher Rate taxpayer, the rate of tax is 32.5% (ouch!).
I hope that's of some help. I'm not an expert, just someone who has to do self-assessment tax returns every year.
Mike.

Hi prussell1963,
Thanks, that's a very clear explanation, and I think you were lucky to get in at 222p if that was recent. Your holding is a similar size to mine so a similar dilemma. The big difference is unless the market crashes tomorrow morning you're already sitting on a significant paper profit which you could get by selling immediately with no capital gains tax to pay unless you're right up to the limit (threshold) with other share sale profits this year. In my case, my most recent purchase, at about 228p, was only about a seventh of my total holding, whereas the vast majority were bought at over 320p back in 2012 so if I sold now I'd still make a large capital loss of over £2k which is absolutely no use to me unless I have gains elsewhere to offset it against. As you say, this share stuff isn't easy - I've been doing it over 20 years now (self-taught) and the more I think I know, the more I realise I don't know. My big mistake with Tesco (and the other supermarkets) was buying them in bulk back in 2011/2012 without analysing their "financials" properly, just because I thought they were "cheap" compared to the old peak which was (if I remember rightly) over £4 a share. Plus, the German discounters came along!
Good luck, whatever you decide!
Mike.

prussell1963,
I don't follow some of your maths. If you have 2550 current shares, and it's a 15 for 19 consolidation, then my calculation suggests you'll instead have 2,013 "new" shares. Where did you get 1,974 shares from?
With the 50.93p special dividend, on your current shares, that's indeed £1,298-71 (or "approx £1,300" as you say).
Sorry if I've missed something.
Mike.

Leas,
Thanks for your kind words, and your own comments.
The only bit I'm not too sure about is "The yield may be increased to reflect the consolidation". I guess if the overall company is making "x" profits, and these are larger going forwards because it's relinquished a couple of loss-making businesses, it can afford to pay a bigger overall dividend (in £ terms) and that dividend now gets divided by a smaller number of shares, so the dividend per share could be higher and thence the yield. And this with a smaller pension deficit to service. How much all this good news is already reflected in the share price only time will tell.
Mike.

Hi all,
It's my first-ever post on LSE, so please be kind!
As a reasonably long-term holder of Tesco shares I've read today's RNS, and most of today's posts about it. Most of my comments are from first principles so am open to being corrected if/where I'm wrong. Firstly, what's right or wrong for any individual investor will depend not only on the "before" and "after" share price, but also on their own tax position.
The Tesco share price cannot be totally detached from the broader market. As I write this, the FTSE is down some 22 points (0.3%), which must be a contribution to this morning's slight fall in Tesco. Secondly, the *effect* of what they're doing is a capital reduction, whereas the *mechanism* in this case is a Special Dividend. Thirdly, the trading performance of Tesco in terms of revenue, profit, etc, and therefore its total value, is, as I see it, not affected by whether it has a large number of "small" shares or a smaller number of "bigger" shares. However, presumably doing the consolidation involves Tesco paying someone (investment bank?) a fee, which of course is then money going out of Tesco and being lost to shareholders. To what benefit?
Ultimately no-one can predict exactly what the share price will be immediately before these transactions (Special Dividend and then Consolidation), or immediately after them.
How beneficial, or otherwise, this will all be to any individual shareholder will probably depend on his/her tax situation. In my own case, the large dividend will push the dividends this tax year above the dividend threshold (from memory £2,000) where otherwise it would have been below it (as, this year, so many of my other dividends have been reduced or scrapped). So I will have to pay income tax (7%, from memory) on some of my dividend. If it had been done by other means, I wouldn't have had to pay any tax because this year I'm way below the CGT threshold. Another consideration, which becomes slightly less trivial the smaller one's holding is, is that unless you start with a multiple of 285 "old" shares (15 x 19) you will not end up with an exact number of "new" shares after the consolidation, so you will lose a fraction of a share (the value of all these, Tesco says, will end up going to charity).
I hope I haven't confused things further for anyone!
Mike.