I had 44622 Vod shares to start and they were inherited in 1991. I asked and got £13,187 and now have 24339 shares left. I was given 1173 Verizon shares and these were sold and a sum of £32955 was returned to me. What are the implications tax wise? sorry while to answer
Thanks.Do you have any idea what the Vodafone shares were worth in 1991 when you inherited them? When exactly in 1991 did you inherit the shares? Were they Racal shares or Vodafone shares? Vodafone demerged from Racal in September 1991. Did you inherit 44,622 shares or a smaller number which increased over time? If it was a smaller number, do you remember how many it was?
It was a smaller number increasing over time. An accountant worked out that the base cost was 44p
Can one consider any tapering relief etc in the calculations in these or has that ended? thank you
again.There is some detailed information here and here on the tax implications of the Vodafone/Verizon demerger. As you election cash dividend, you took the C option.The adjusted cost of the Vodafone holding of 44,622 shares was £19,634 (44p per share). The new Vodafone holding was worth £58,998 and the new Verizon holding was worth £33,161 after the demerger. The combined value of the new holdings was, therefore, £92,159. The cash received from Vodafone was £13,187 but it is a dividend so has no part in the cost apportionment. The cost of £52,795 (£19,634 + £33,161) is apportioned as follows:24,339 VODAFONE SHARES(£58,998 / £92,159) x £52,795 = £33,7981,173 VERIZON SHARES(£33,161 / £92,159) x £52,795 = £18,997. Any cash paid to your of Verizon shares should be deducted from the figure of £18,997 to arrive at the true net cost of the Verizon shares. Assuming no fractional cash was received, you made a gain of £13,958 when you sold the Verizon shares (£32,955 - £18,997).
The £13,187 return of value payment and the value of the Verizon shares of £33,161 are treated as dividends tax purposes with a 10% notional tax credit attached so the gross is £51,498 (£13,187 + £33,161 / 0.9). You will almost certainly have higher rate tax to pay on some or all of the dividend depending on how much other income you received in 2013/14.I hope this helps but let me know if you have any further questions.
Thank you detailed reply. I replied to your query but am not sure if it was sent properly. Does this mean I pay income tax on the two dividends but not CGT?
I wanted to have some time to think this over. May I come back to you tomorrow?
You certainly can though I will probably be unavailable from midday tomorrow until the early evening.
The £33,161 is 90% of the deemed gross dividend of £36,846. The difference between the two figures is the notional 10% tax credit.