Beazley Share Discussion Threads

[eeza] 26/2/2015 17:32

Normally the share price drops by the amount of declared dividend (net or gross). UK based Co's usually pay net div (plus Tax credit) & offshore (Guernsey etc) usually pay gross div. If intending to sell & then repurchase there is also the dealing costs to factor in - i.e selling commission, buying comm & SD (if any).

[schofip] 26/2/2015 17:25

Sorry V11SLR has already confirmed it is paid net.

[schofip] 26/2/2015 17:24

Typo56
I don't think you can but would be happy for someone knowledgable to confirm. My original post was purely to save losing this tax in my ISA(and would have been happy just to do that)anything else has been purely luck. It seems an ISA saves you any capital gains liabilities but does not let you claim back dividend tax unless the dividend is paid gross which I don't think it is.

[typo56] 26/2/2015 16:31

If you're a UK resident can't you claim exemption from the withholding tax? May not be worth the hassle.

[hooley] 26/2/2015 16:02

No stamp duty on this stock and a 10% withholding tax. I've had them for a year. They've been wizard. Just bought more. I've had 43p of divis per share - a running yield of nearly 20%. Better than a deposit a/c with Barclays etc.

[wasntreallysurewhatwasgoingon] 26/2/2015 15:53

We have lift off!

[typo56] 26/2/2015 15:33

schofip, I'm not sure about BEZ dividends, because I think it is tax resident in Ireland. Dividends may therefore be liable to withholding tax that, in theory, I believe you should be exempt from if you're a qualifying non-resident.

In the UK companies declare and distribute net dividends. These come with a 1/9 dividend tax credit. The net dividend plus the tax credit is the gross dividend. i.e. The net dividend is the 90% of the gross dividend.

If you pay tax then the tax credit can be deducted from the amount of tax you have to pay (based on the gross value). Basic rate tax payers pay 10% tax on gross dividend income. This means that, after applying the tax credit, they haven't anything to pay. I think higher rate tax payers currently pay an additional 22.5% tax on the gross dividend. Non tax payers can't obtain a refund of the tax credit because no tax has actually been paid - it's simply a tax credit allowance. (Some say the tax credit is intended to take account that companies distribute dividends from post-tax profits. i.e. to tax dividends would be double-taxation).

Years ago the system was somewhat different and ISAs and pensions could reclaim tax credits. Nowadays I can't see there's an advantage from a dividends point of view in holding stocks in an ISA, unless you're a higher rate tax payer.

[iomhere] 26/2/2015 15:00

schofip
Hi, were you charged stamp duty on the repurchase because I believe this share is not subject to stamp duty?
IOM

[schofip] 26/2/2015 14:32

Hi Typo56
I admit to being no expert here and may have got lucky this time. So thanks for your words of caution.

My understanding is that the 18p gross dividend paid is subject to a non reclaimable 10% uk tax. I am i deluded here or just dam wrong.

[wasntreallysurewhatwasgoingon] 26/2/2015 14:24

I agree nofool and will now join you.

[nofool] 26/2/2015 12:24

The 50dma currently at 288p on the dailies.

I'm Buying into a collision with that.

[typo56] 26/2/2015 11:37

schofip, interesting what you say about a net dividend of 10% non recoverable. Is that an Irish withholding tax?

I'm also a bit of a novice but thought UK dividends were declared net and are then grossed up with a dividend credit of 1/9 (which you can offset against income tax if you pay it).

You've done okay this time by selling yesterday, because the share price has fallen by more than the 18p ex-div, but quite often this doesn't happen, so it's not a failsafe system!

[schofip] 26/2/2015 11:34

Never been overly greedy so started buying some back in original exercise over.

[nofool] 26/2/2015 11:18

Interesting


I'm Buying now based on the moving averages etc.

That's all you can do!

[schofip] 26/2/2015 10:40

No! a 16.2p net dividend after 10% non recoverable tax paid

With the offer price now 291.3 it is an 8.5p net gain and with 50k shares I'll let you do the maths.

I am not posting here to bragg as I am not that confident however it coincided with other market factors detailed above, and felt it may be a useful thought for other novice ISA investors like me.

I have built up my ISA portfolio with reasonable success with limited trading experience and always willing to test my theories with other people and then act on gut feel.

My next dilemma is when to buy back in.

The reason I actually bought into these shares is quite interesting. I went for an IT job with them a couple of years ago and did not get it however in the process found out a lot about the company and the fact that the management culture was pretty inflexible to employees meaning a tight run ship. The fact they did not offer me the job scored highly in their favour. LOL.

[v11slr] 26/2/2015 10:25

When you buy back don't forget to account for the 1.5p per share stamp duty as well. (0.5% of £3).

[typo56] 26/2/2015 09:54

"This effectively means that if I bought straight back in now I would have gained a 21p tax tree dividend in my ISA."

Except the shares you sold yesterday would have had the benefit of 18p dividend, the shares you bought back don't.

Think of it like going short yesterday at 316p. Sure you could close at 295p today but, after you've paid the 18p dividend, you'd only be up 3p.

[schofip] 26/2/2015 09:21

So what did I end up doing
I have to admit I don't normally get these things right however
with the FTSE almost on an all time high and the share in over bought territory I finally bailed out @316 late yesterday. This effectively means that if I bought straight back in now I would have gained a 21p tax tree dividend in my ISA.

I am positive on the shares and will definitely be buying back in.

What was particularly annoying was that with the spread standing at 316.80 - 317.00 late yesterday no broker would give me a sell quote higher than 316.00. AJ Bell would not give an online quote at all. When I rang them. Their dealer told me that their system would not provide what it called a quote that was a disadvantage to a customer i.e. an artificially low quote. They said the only way I could deal was to put in a limit order below the current offer price and the order would execute if the phoney offer price reached my limit.

[mr angry] 26/2/2015 09:04

Didn't ADVFN used to mark XD as a flag on the monitor screen or did i imagine that? It would be useful anyway

[nigelmoat] 26/2/2015 08:55

Ex dividend markdown provides good opportunity to top up. Added here this morning.

[edmundshaw] 26/2/2015 08:26

FWIW a classical ex dividend markdown. So far...

[schofip] 21/2/2015 12:49

Thanks for all comments greatfully received. I wasn't thinking of taking the cash out of the isa if I sold . My thinking was that by selling my reasonably large holding (50k shares) I would have 10% more dividend albeit in cash. If the shares then dropped say 18-20p (and possibly more) I could then buy them back. Since there is no stamp duty and a marginal .2p spread even with £24 (buy/sell) dealing charges I may be better off. Capital gains would not affect the holding.

[yf23_1] 21/2/2015 01:00

schofip
You're thinking too deep. You'll only be worse off (technically) if you were a high rate tax payer and you received outside your ISA. I wouldn't bother thinking about it. About the only benefit of gross stuff would be some government gilts which are paid gross, so advantageous inside an ISA.

[v11slr] 20/2/2015 16:58

10% tax is deducted at source, so you will receive the net amount. This tax deduction can't be reclaimed. Whether you would be better selling before xd depends on the share price performance. Theoretically it should drop by the dividend amount but theory and practice are often widely apart. Then you have to factor in dealing costs and spread to replace the holding whether you buy back in BEZ or another share.