I have a number of Standard Life shares which were given when they went public.
When it comes to financial speak I'm illiterate but I believe my Bradford and Bingley shares are performing well :(.
Anyway I got a letter from SL informing me that they have flogged off their Canadian companies and are retuning 73p a share as well as consolidating existing shares. I'm with it so far.
They have given me 2 options, this is where I am starting to loose it.
I can opt for an Income Option (C shares) or a Capital Option (B shares).
Am I right in believing that Income Option is the creation of more shares to add to my existing shares and the Capital Option is a cheque to the value of the number of shares I hold X 73p.
Why cant they write in plain English so that a thicko like me can understand?
Over to someone more financially savvy.
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This might help:
tinyurl.com/oea69zp
Link to DT.
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You should have a leaflet explaining the difference between the two options included with your letter.The common questions and answers are given.
The good news is that you are about to receive a cheque for 73p x the number of shares that you hold after April 1st.
You have the option to treat this as income or capital for tax purposes and unless you are a higher rate taxpayer then you should opt for the option 1income option.These are the C shares and you will see from the leaflet that you are or should be entitled to a tax credit to cover income tax liability.
The number of shares you own will be reduced .Divide your holding by 11 and multply by 9 to get the number of new shares you hold. The current price per share is 419p.
I am only aware of this because SWMBO has just received the same letter.....
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.....and I spent a couple of hours yesterday trying to take it on board myself.....
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Hello.
I found this thread when looking up Standard Life shares latest offer options.
The conclusion I have come to is that the best option for a majority of taxpayers may be to take the capital route B as is explained in the Daily Telegraph link above. That is because the capital payment is free of tax to anyone whose capital gains will not exceed £10000 this tax year.
www.gov.uk/capital-gains-tax/allowances
There is further detailed discussion of the options here
forums.moneysavingexpert.com/showthread.php?p=67766419
BTW, the Telegraph headline reference to a "windfall" is wrong.
They were criticised previously when describing Vodafone payout in a similar fashion, but have not learnt the lesson.
www.telegraph.co.uk/finance/personalfinance/investing/shares/10690936/I-was-expecting-a-Vodafone-windfall-but-my-shares-are-worth-5000-less.-Whats-going-on.html
p.s. The above is not advice, merely my informed opinion.
Last edited by: BrianByPass on Sun 22 Feb 15 at 16:41
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"Why can't they write in plain English?" Because then they'd be giving tax advice, which they're not doing.
Treat the following as you would treat any conversation in a pub, and pay an accountant for some advice if need be.
1. You are going to receive 73p for every share you own.
2. In the normal run of events this would give rise to a dividend, which would be tax-free to the extent it doesn't make you a higher rate taxpayer, and taxable at an effective 25% of the cash sum received to the extent it does make you a higher rate taxpayer (and yet higher rates if it takes you over 100k or 150k of total income).
3. Each year the Government allows one to make Capital Gains of the "annual exempt amount" tax free. For 2014/15 this exempt amount is £11,000.
4. Most people don't really have capital gains in most years, so Standard Life are coming up with a tax avoidance technique to turn what would have been income (see point 2) into a capital gain that most people can receive tax free.
5. If you have no other capital gains during 2014/15 and you hold fewer than 13,698 shares then you should elect for the capital treatment and need read no further. (13,698 shares multiplied by 73p = £11,000 which is the annual exempt amount.)
6. If you own more than 13,698 shares then you will need to calculate the capital gain that arises; you will have some base cost attributable to the shares. So if you paid £500 for 100 shares, and you are receiving £73 in this process and the value of the shares immediately after the dividend is £600 then the attributable base cost is [73/(600+73)]*£500. This amount should be deducted from the total proceeds in order to give you your capital gain.
7. Knowing the capital gain, and your marginal income tax rates, and that capital gains are taxed at 28% you can make an informed decision as to whether to take the income or capital route.
Hope that helps.
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An admirably simple explanation.
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My brain simplifies the decision to:
a. Do you want cash in your pocked and a reduced value to your total holding or
b. Retain the total value of your holding in SL shares
The above takes no account of any tax implications, but as your holding is of the initial giveaway amount the numbers are not huge either way.
Don't sue me if I am wrong!
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>> My brain simplifies the decision to:
>>
>> a. Do you want cash in your pocked and a reduced value to your total
>> holding or
>> b. Retain the total value of your holding in SL shares
No, they are going to return you the cash either way - there is no option to stay invested (which would defeat the object of them reducing capital).
Once you have the cash of course, there's nothing to stop you buying more SL shares with it. The result of that would not be the same as the company letting you stay invested, because they would then still have the money; buying shares in the market means that the seller of the shares gets the money, not the company.
It would have been possible I suppose for SL to make available a share dealing service for people to use to buy shares in the market, but it really isn't the company's job to do that at the expense of all shareholders. Anybody who wants to buy more shares can easily do so for £10 or less, using a sharedealing service.
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Thank you Manatee, My above message is a total load of rubbish and the world will be a better place if someone could delete it.
Thanks.
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Standard Life Share Query - Clk Sec
