Vodafone B Shares: Income tax or CGT?

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beattie

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Does anyone know if the special dividend that Vodafone are paying will be classed as income or CG tax? Ordinarily I would have thought it was income but as this is accruing from a disposal from a comany they owned it could be argued that it is cGT.

Hopefully someone who knows a lot more about this could enlighten me as I am at a loss to explain it.
 
Hmmm... sounds a bit like the FA capital repayment made before the UB takeover which was deemed liable for CGT and not income tax. If I recall correctly FA advised shareholders of this at the time.
 
beattie said:
Does anyone know if the special dividend that Vodafone are paying will be classed as income or CG tax? Ordinarily I would have thought it was income but as this is accruing from a disposal from a comany they owned it could be argued that it is cGT.

Hopefully someone who knows a lot more about this could enlighten me as I am at a loss to explain it.
Click to expand...

Hi Beattie

Thats the first i heard of a special dividend - normally income tax would apply
How does it work - is it a buy back?
Usually a buy back would receive CGT treatment
 
bazermc said:
Hi Beattie

Thats the first i heard of a special dividend - normally income tax would apply
How does it work - is it a buy back?
Usually a buy back would receive CGT treatment
Click to expand...

They are returning the cash from the sale of VF Japan (approx 6b stg) plus an extra 3b stg to give a total payout of 9b. (I think this is the particulars of this case). They are making a once off payment of 0.15p per share in the form of B Shares. They are also making a dividend payment of 3.87p which income tax will apply to.

VF actually made a loss on the sale of their Japanese arm so is there a case for saying that this payment should be exempt from tax? I don't know but if some saavy person has found out I think a great deal of people would be interested in hearing the response as their are ~400k VF shareholders in Ireland.

This could become even more pressing if they dispose of their US arm, Verizon, where up to 25b could be paid to VF (they of course would have to decide whether to return this to shareholders)
 
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