Vpc Specialty Lending In... Share Discussion Threads

[waterloo01] 02/3/2020 15:07

Odd to fall before Ex-divi, that now stands at over 10% yearly

[chucko1] 28/2/2020 22:45

Clearly they just sat on the bid and soaked up all the panic. So if you feel like panicking, this is a good place to start. Has not lost much value since the shooting began a week or so ago.

But upon a US recession, this will be lower, so I do not see selling a few as irrational.

[eeza] 28/2/2020 18:31

Free float reducing.

[waterloo01] 28/2/2020 18:24

Is there a benefit to II income holders to have this as interest, rather than as a dividend?

[a0002577] 28/2/2020 18:16

And another 100K announced this evening, redhill9

[scrwal] 28/2/2020 13:59

ACT was abolished 6 April 1999.
The 10% credit implemented as a replacement was abolished 6 April 2016 and was effectively replaced by the dividend allowance of £5000 which is now £2000.

The tax rates for div income over the £2000 is Basic rate 7.5% ,Higher rate 32.5%, Additional rate 38.1%

[redhill9] 28/2/2020 11:10

After a break of a week or so I see VSL are back on the share buying trail - another 100k announced this morning.

[chucko1] 27/2/2020 16:07

Yes, and that 3% sell-off did not appear to be market-related. It seemed to have been randomly knocked on the head by some strange object.

[2wild] 27/2/2020 14:33

LOL market down 10% in last few days and these are off 3% from a recent multi year high and are up over 6% in last 12 weeks.

[chucko1] 27/2/2020 14:21

On another note, it is nice to see that the REITs are holding up fairly well. With a large fixed income component, and with all time low 10 year rates (and not likely at all to bounce higher to any degree), this still feels a handy place to be invested. That said, I’ve sold some to make room for opportunities if more desperate selling of blue chips should come to pass. 10% sell off so far is interesting, but not the whole story, perhaps.

[chucko1] 27/2/2020 14:19

Yes. When I refer to the 10% tax, this is wholly independent from the 20% (so 25% uplift) that I believe is being referred to in the Deloitte document. Tax-exempt wrappers have always benefitted from this non-witholding other than REITs, annoyingly (as I own so many) where some providers pay in full and reclaim from HMRC and others do effect the withholding.

So what was I referring to? Unless, and it is more than possible, I am now out of date, Bloomberg would indicate dividends 11.1111% above those that were paid in full to investors. So, for example, a dividend to you of 10p would be shown as 11.1111p. Of this, 10% was paid to the Exchequeur (I.e. 1.1111p) and you got the rest (10p). And it was 10p which was the declared dividend and the yield calculated from this lower number.

Further, if you DID have to pay tax, you would be taxed on the 10p. HOWEVER, IT WAS ASSUMED 1.1111p HAD ALREADY BEEN PAID ON A REAL DIVIDEND OF 11.1111p. This is why the effective tax rate was only as follows for a 40% tax payer.

Dividend tax rate = 32.5%

Tax = 32.5% x 11.1111 = 3.6111p

Net dividend = 11.1111 - 3.6111 = 7.5000p

Div actually received = 10p

Further tax of (10.0000 - 7.5000)p = 2.5000p or 25%.

I’ve seen these calculations when I was a 40% tax payer prior to the 45% rate coming along (at that time, everything was in a wrapper, so I never saw the new calculation).

But if I am now out of date (I know the div tax rates have changed) then someone with more tax knowledge than me is welcome to put me right!!

[eeza] 27/2/2020 13:51

Looks like the overhang has been passed from Invesco to another.

[a0002577] 27/2/2020 12:22

Good morning, Chucko

I think you need to clarify your statement about companies 'withholding' part of a dividend and your reference to Culpability Brown.

This is from :

"Withholding tax
Dividends : there typically is no withholding tax on dividends paid by UK companies under domestic law, although 20% withholding tax generally applies to distributions paid by a REIT from its tax exempt rental profits"

Culpability Brown abolished Advance Corporation Tax which meant that in tax free wrappers you got 25% extra for each dividend) but paid a notional 10% from the exchequer for a period of 5 years only.

Prior to that abolition, low earners could reclaim if their income was below the lower limit and pension funds could also reclaim. You also got this on VCT dividends. After his change only SIPPs, PEPs & ISAs got the 11% (ish) uplift.

This change had a huge impact on defined benefit pensions which lost 20% of their dividend income.

[redhill9] 27/2/2020 11:03

thanks chucko1, that's how I saw it.

Over time a higher NAV should mean increased dividends so it is a beneficial move for shareholders.

[waterloo01] 27/2/2020 10:36

Thanks. I'll defer to you on that one.

[chucko1] 27/2/2020 10:26

Waterloo, when a company pays dividends, it has to withhold 10% of it which you never get back. Thank Gordon Brown for that. So I take the payments as interest to mean a saving of 10% for the company. They may not pay it out in the form of higher payments, so then the benefit remains with the company - therefore higher NAV over time.

[waterloo01] 27/2/2020 10:25

In a recession I guess they will have more defaults but equally will write more business. 10% divi but with the buy backs, wonder if it might go higher next year?

[waterloo01] 27/2/2020 09:52

Not sure, but better for holders as get more relief on interest than dividends and no dividend holding tax which I guess is better if holding in SIPP or ISA.

Edit: Need to check this though.

[redhill9] 27/2/2020 09:37

If I understand that second paragraph correctly, I think that means there is a tax advantage to the company of paying dividends as an interest distribution, thereby improving NAV. Is that right? Anyone disagree?

[cwa1] 27/2/2020 07:44

DIVIDEND DECLARATION

The Board of Directors of the Company has declared an interim dividend of 2.00 pence per share for the three-month period to 31 December 2019. The dividend will be paid on 2 April 2020 to shareholders on the register as at 6 March 2020. The ex-dividend date is 5 March 2020.

The Company has elected to designate all of the interim dividend for the three-month period to 31 December 2019 as an interest distribution to its shareholders, thereby "streaming" income from interest-bearing investments into dividends that will be taxed in the hands of shareholders as interest income. No income tax will therefore be deducted at source from this, or from future interest distributions.

[chucko1] 26/2/2020 11:22

One of the advantages of something artificially low due to some forced selling, and in any event, at a reasonable discount to NAV.

I’ve been selling a meaningful portion of my premium REITs as there will be a good opportunity to reinvest (starting nowish!). That includes RGL which had been poking its tongue out to the market sell off for too long. Especially with a fund raising not far off, probably.

[ph1ts] 26/2/2020 11:09

Price has held up well compared to my other carnage!

[eeza] 25/2/2020 15:51

A few holdings RNS'.

[11_percent] 24/2/2020 16:19

New presentation.

[skyship] 24/2/2020 08:02

A buyback would have been nice; but I'm carping, this is a great result and clears the way for the share price to rise to the NAV level...