What does return of capital mean?

S

sharkattack

Registered User
Messages
78
Along with my dividend from Aviva today I got a separate payment which was quiet a surprise as was not expecting it. After googling what it might be for it looks like it was for Return of capital to ordinary shareholders - "On 2 March 2022, Aviva announced a proposed capital return of £4.75bn in total".

What does this mean for me apart from the money I received? Do I still have the same number of shares that I aways had? Would tax have been paid on this little windfall that I received?
 
When a company issues new shares, the money it received is split into two conpoments - one is the amount of the share itself and the other is a premium depending on the amount paid

Aviva shares have a nominal value of 32 17/19 pence

The share premium can be returned to investors which is what Aviva is doing.

The effect on you is to reduce the cost of the shares, so if you purchased the shares at £ 300 each, then your purchased price is now reduced by £ 1 if I read the announcement correctly

No tax is paid - it will increase any CGT you have to pay when you sell the shares
 
You have not disposed of any shares - so where does the CGT come ?

Is it that you were given "B" shares, which were then purchased by the company for £ 1 ?

If that is the case, then yes, CGT would be due

It is really not a Return of Capital properly speaking
 
I raised a query with Revenue,
If the units disposed at 423.70 triggers a capital gain, then you are liable for CGT.
That is their guidance.
 
You must log in or register to reply here.
Back
Top