Google Groups no longer supports new Usenet posts or subscriptions. Historical content remains viewable.
Dismiss
OT: SCRIP versus DRIP
486 views
Skip to first unread message
Dave Plowman (News)
Apr 23, 2016, 11:49:07 AM4/23/16
to
What's the difference between SCRIP and DRIP? I know they are both ways of
getting shares in a company you already have shares in instead of a cash
dividend. But why the two? Reams of information - conditions etc - but no
easy to understand explanation.
--
*Why is the word abbreviation so long?
Dave Plowman da...@davenoise.co.uk London SW
To e-mail, change noise into sound.
getting shares in a company you already have shares in instead of a cash
dividend. But why the two? Reams of information - conditions etc - but no
easy to understand explanation.
--
*Why is the word abbreviation so long?
Dave Plowman da...@davenoise.co.uk London SW
To e-mail, change noise into sound.
Andy Cap
Apr 23, 2016, 12:15:33 PM4/23/16
to
On 23/04/16 16:48, Dave Plowman (News) wrote:
> What's the difference between SCRIP and DRIP? I know they are both ways of
> getting shares in a company you already have shares in instead of a cash
> dividend. But why the two? Reams of information - conditions etc - but no
> easy to understand explanation.
>
I don't know the answer but Motley Fool would be a good place to ask.
> What's the difference between SCRIP and DRIP? I know they are both ways of
> getting shares in a company you already have shares in instead of a cash
> dividend. But why the two? Reams of information - conditions etc - but no
> easy to understand explanation.
>
They have loads of boards but this one looks most suitable.
http://boards.fool.co.uk/ask-a-foolish-question-50000.aspx
Andy C
spuorg...@gowanhill.com
Apr 23, 2016, 12:18:57 PM4/23/16
to
On Saturday, 23 April 2016 16:49:07 UTC+1, Dave Plowman (News) wrote:
> What's the difference between SCRIP and DRIP? I know they are both ways of
> getting shares in a company you already have shares in instead of a cash
> dividend. But why the two?
With a Scrip dividend, new shares are issued by the company, which can be acquired by investors instead of a cash dividend payment.
> What's the difference between SCRIP and DRIP? I know they are both ways of
> getting shares in a company you already have shares in instead of a cash
> dividend. But why the two?
As part of a DRIP existing shares are purchased in the market which are subject to stamp duty and commission. Any residual cash is retained within the plan.
https://www.tddirectinvesting.co.uk/help/faqquestions/what-are-drip-and-scrip-dividends/
Owain
Andy Burns
Apr 23, 2016, 12:24:39 PM4/23/16
to
Dave Plowman (News) wrote:
> What's the difference between SCRIP and DRIP?
SCRIP is where the company issues new shares to existing shareholders
> What's the difference between SCRIP and DRIP?
instead of a cash dividend.
DRIP is where the dividend is used to buy existing shares on the open
market (market cap stays the same, so no dilution of per share value,
but stamp duty will have to be paid).
Dave Plowman (News)
Apr 23, 2016, 12:26:31 PM4/23/16
to
In article <7b9c7511-4f8b-41f3...@googlegroups.com>,
Yes. I got that far by Googling too. What I want to know is the difference
in practice.
--
*When a clock is hungry it goes back four seconds*
in practice.
--
*When a clock is hungry it goes back four seconds*
GB
Apr 23, 2016, 1:54:02 PM4/23/16
to
On 23/04/2016 17:58, Chris Hogg wrote:
> On Sat, 23 Apr 2016 17:24:56 +0100, Andy Burns
> So in practice what....you get more shares under scrip than drip, the
> other way round, or the same either way?
>
That question doesn't really make much sense, actually. But then the
concept of a scrip dividend awarded to all shareholders is completely
daft, so I'm not surprised that people are confused.
A scrip distribution simply dilutes the share price. Typically, a
company notices that its share price is quite high, say £50. So, maybe
it distributes 9 additional shares for each existing one. In that case,
each shareholder then has 10 shares each worth £5 for each original one
worth £50. That sort of makes sense, but some eminent companies don't
bother and end up with shares worth thousands per share.
A scrip dividend for all shareholders instead of a cash dividend makes
no sense. The company decides not to make a cash dividend, but issues
say 5% additional shares instead. So everybody has more shares, but
worth proportionately less per share. Maybe, it makes people feel good,
but I don't get why?
A DRIP scheme is just a regular investment in the company. It happens to
use the cash dividends, but it could equally well just be £50 a month
taken from your bank account.
> On Sat, 23 Apr 2016 17:24:56 +0100, Andy Burns
> other way round, or the same either way?
>
That question doesn't really make much sense, actually. But then the
concept of a scrip dividend awarded to all shareholders is completely
daft, so I'm not surprised that people are confused.
A scrip distribution simply dilutes the share price. Typically, a
company notices that its share price is quite high, say £50. So, maybe
it distributes 9 additional shares for each existing one. In that case,
each shareholder then has 10 shares each worth £5 for each original one
worth £50. That sort of makes sense, but some eminent companies don't
bother and end up with shares worth thousands per share.
A scrip dividend for all shareholders instead of a cash dividend makes
no sense. The company decides not to make a cash dividend, but issues
say 5% additional shares instead. So everybody has more shares, but
worth proportionately less per share. Maybe, it makes people feel good,
but I don't get why?
A DRIP scheme is just a regular investment in the company. It happens to
use the cash dividends, but it could equally well just be £50 a month
taken from your bank account.
Andy Burns
Apr 23, 2016, 1:58:21 PM4/23/16
to
Chris Hogg wrote:
> So in practice what....you get more shares under scrip than drip, the
> other way round, or the same either way?
Well, with DRIP there shouldn't be any effect on the share price (or
> So in practice what....you get more shares under scrip than drip, the
> other way round, or the same either way?
rather, none that's any different from a normal sale/purchase) and you
own more of them.
with scrip (assuming it's the same class of shares being issued) it will
reduce the value of the existing shares at least in the short term, so
your increased number of shares might not be worth any more.
Andy Burns
Apr 23, 2016, 2:01:59 PM4/23/16
to
GB wrote:
> A scrip dividend for all shareholders instead of a cash dividend makes
> no sense. The company decides not to make a cash dividend, but issues
> say 5% additional shares instead. So everybody has more shares, but
> worth proportionately less per share. Maybe, it makes people feel good,
> but I don't get why?
Each shareholder may be given the choice between taking a cash dividend
> A scrip dividend for all shareholders instead of a cash dividend makes
> no sense. The company decides not to make a cash dividend, but issues
> say 5% additional shares instead. So everybody has more shares, but
> worth proportionately less per share. Maybe, it makes people feel good,
> but I don't get why?
or a scrip dividend, the former will extract cash but reduce the value
of the remaining shares, the latter will keep the value of the increased
number of shares about the same ...
DJC
Apr 23, 2016, 2:57:15 PM4/23/16
to
On 23/04/16 17:25, Dave Plowman (News) wrote:
> In article <7b9c7511-4f8b-41f3...@googlegroups.com>,
> <spuorg...@gowanhill.com> wrote:
>> On Saturday, 23 April 2016 16:49:07 UTC+1, Dave Plowman (News) wrote:
>>> What's the difference between SCRIP and DRIP? I know they are both
>>> ways of getting shares in a company you already have shares in instead
>>> of a cash dividend. But why the two?
>
>> With a Scrip dividend, new shares are issued by the company, which can
>> be acquired by investors instead of a cash dividend payment.
>
>> As part of a DRIP existing shares are purchased in the market which are
>> subject to stamp duty and commission. Any residual cash is retained
>> within the plan.
>
>> https://www.tddirectinvesting.co.uk/help/faqquestions/what-are-drip-and-scrip-dividends/
>
>> Owain
>
> Yes. I got that far by Googling too. What I want to know is the difference
> in practice.
>
I think, if you are being offered a choice of one or the other it
> In article <7b9c7511-4f8b-41f3...@googlegroups.com>,
> <spuorg...@gowanhill.com> wrote:
>> On Saturday, 23 April 2016 16:49:07 UTC+1, Dave Plowman (News) wrote:
>>> What's the difference between SCRIP and DRIP? I know they are both
>>> ways of getting shares in a company you already have shares in instead
>>> of a cash dividend. But why the two?
>
>> With a Scrip dividend, new shares are issued by the company, which can
>> be acquired by investors instead of a cash dividend payment.
>
>> As part of a DRIP existing shares are purchased in the market which are
>> subject to stamp duty and commission. Any residual cash is retained
>> within the plan.
>
>> https://www.tddirectinvesting.co.uk/help/faqquestions/what-are-drip-and-scrip-dividends/
>
>> Owain
>
> Yes. I got that far by Googling too. What I want to know is the difference
> in practice.
>
depends on your tax position and in which jurisdiction you reside. ie as
a shareholder one will cost you more tax than the other.
--
djc
(▀̿Ĺ̯▀̿ ̿)
No low-hanging fruit, just a lot of small berries up a tall tree.
John Rumm
Apr 23, 2016, 3:36:28 PM4/23/16
to
On 23/04/2016 17:58, Chris Hogg wrote:
> On Sat, 23 Apr 2016 17:24:56 +0100, Andy Burns
> <feb2017...@adslpipe.co.uk> wrote:
>
> On Sat, 23 Apr 2016 17:24:56 +0100, Andy Burns
> <feb2017...@adslpipe.co.uk> wrote:
>
> So in practice what....you get more shares under scrip than drip, the
> other way round, or the same either way?
That depends... it all depends on the actual terms of the scrip issue.
> other way round, or the same either way?
However in general, its usually in the companies interest to encourage
the take up of the scrip issue, so they will often make the deal more
attractive than that which you could achieve simply re-investing your
cash dividend in more shares yourself.
Typically a company will do a deal where they will issue a 1 for N type
of arrangement. e.g. you get 1 new share for every 5 held.
It has the effect in the short term of issuing more shares, (and
consequentially devaluing the share price - maintaining the same overall
market cap). However it allows the company to retain some of the cash
that would otherwise be paid out in dividends. From the investors point
of view they can buy more shares (often at a slight discount) and with
none of the typical transaction fees.
(Another similar scheme is the "rights issue" where existing investors
are given the chance to buy more shares (usually discounted) in
proportion to their current holding. That will however also raise
additional money, and increase the overall market cap).
Drip, (i.e. electing to receive share in place of dividends) simply uses
the dividend to purchase enough *existing* shares at the current market
value, to make up the bulk of the dividend. So say your dividend due
would have been £18, and the share price is £5, you would get 3 new
shares and £3 in cash. Again it can save transaction fees, and gets your
dividend income re-invested faster than taking cash and then buying on
the open market.
--
Cheers,
John.
/=================================================================\
| Internode Ltd - http://www.internode.co.uk |
|-----------------------------------------------------------------|
| John Rumm - john(at)internode(dot)co(dot)uk |
\=================================================================/
dennis@home
Apr 23, 2016, 3:40:26 PM4/23/16
to
On 23/04/2016 19:56, DJC wrote:
> I think, if you are being offered a choice of one or the other it
> depends on your tax position and in which jurisdiction you reside. ie as
> a shareholder one will cost you more tax than the other.
>
You don't want to get into tax avoidance by choosing which!
> I think, if you are being offered a choice of one or the other it
> depends on your tax position and in which jurisdiction you reside. ie as
> a shareholder one will cost you more tax than the other.
>
Avoiding tax makes you evil, apparently.
Rod Speed
Apr 23, 2016, 5:03:03 PM4/23/16
to
Dave Plowman (News) <da...@davenoise.co.uk> wrote
> What's the difference between SCRIP and DRIP?
Trivial to check that using google.
With SCRIP the company issues new shares and so dilutes the shareholding.
With DRIP it buys the shares on the market and doesn’t dilute the
shareholding.
> I know they are both ways of getting shares in a company you already have
> shares in instead of a cash dividend. But why the two? Reams of
> information
> - conditions etc - but no easy to understand explanation.
What is so hard to understand about this one which happens to be the first
hit.
https://www.tddirectinvesting.co.uk/help/faqquestions/what-are-drip-and-scrip-dividends/
> What's the difference between SCRIP and DRIP?
With SCRIP the company issues new shares and so dilutes the shareholding.
With DRIP it buys the shares on the market and doesn’t dilute the
shareholding.
> I know they are both ways of getting shares in a company you already have
> shares in instead of a cash dividend. But why the two? Reams of
> information
> - conditions etc - but no easy to understand explanation.
hit.
https://www.tddirectinvesting.co.uk/help/faqquestions/what-are-drip-and-scrip-dividends/
Rod Speed
Apr 23, 2016, 5:24:10 PM4/23/16
to
"Dave Plowman (News)" <da...@davenoise.co.uk> wrote in message
news:557564b...@davenoise.co.uk...
> In article <7b9c7511-4f8b-41f3...@googlegroups.com>,
> <spuorg...@gowanhill.com> wrote:
>> On Saturday, 23 April 2016 16:49:07 UTC+1, Dave Plowman (News) wrote:
>> > What's the difference between SCRIP and DRIP? I know they are both
>> > ways of getting shares in a company you already have shares in instead
>> > of a cash dividend. But why the two?
>
>> With a Scrip dividend, new shares are issued by the company, which can
>> be acquired by investors instead of a cash dividend payment.
>
>> As part of a DRIP existing shares are purchased in the market which are
>> subject to stamp duty and commission. Any residual cash is retained
>> within the plan.
>
>> https://www.tddirectinvesting.co.uk/help/faqquestions/what-are-drip-and-scrip-dividends/
>
>> Owain
>
> Yes. I got that far by Googling too. What I want to know is the difference
> in practice.
The difference in practice is dilution of the share capital with SCRIP.
> <spuorg...@gowanhill.com> wrote:
>> On Saturday, 23 April 2016 16:49:07 UTC+1, Dave Plowman (News) wrote:
>> > What's the difference between SCRIP and DRIP? I know they are both
>> > ways of getting shares in a company you already have shares in instead
>> > of a cash dividend. But why the two?
>
>> With a Scrip dividend, new shares are issued by the company, which can
>> be acquired by investors instead of a cash dividend payment.
>
>> As part of a DRIP existing shares are purchased in the market which are
>> subject to stamp duty and commission. Any residual cash is retained
>> within the plan.
>
>> https://www.tddirectinvesting.co.uk/help/faqquestions/what-are-drip-and-scrip-dividends/
>
>> Owain
>
> Yes. I got that far by Googling too. What I want to know is the difference
> in practice.
Rod Speed
Apr 23, 2016, 5:31:49 PM4/23/16
to
"Chris Hogg" <m...@privacy.net> wrote in message
news:0banhbtopo7so51es...@4ax.com...
> So in practice what....you get more shares under scrip than drip, the
> other way round, or the same either way?
Marginally fewer with DRIP because commission and other charges
> other way round, or the same either way?
are deducted from the dividend so fewer shares are bought.
The much more important difference is that SCRIP dilutes the total share
capital base.
Capitol
Apr 24, 2016, 4:33:35 AM4/24/16
to
Dave Plowman (News) wrote:
> In article<7b9c7511-4f8b-41f3...@googlegroups.com>,
> <spuorg...@gowanhill.com> wrote:
>
>> On Saturday, 23 April 2016 16:49:07 UTC+1, Dave Plowman (News) wrote:
>>
>>> What's the difference between SCRIP and DRIP? I know they are both
>>> ways of getting shares in a company you already have shares in instead
>>> of a cash dividend. But why the two?
>>>
>
>> With a Scrip dividend, new shares are issued by the company, which can
>> be acquired by investors instead of a cash dividend payment.
>>
>
>> As part of a DRIP existing shares are purchased in the market which are
>> subject to stamp duty and commission. Any residual cash is retained
>> within the plan.
>>
>
>> https://www.tddirectinvesting.co.uk/help/faqquestions/what-are-drip-and-scrip-dividends/
>>
>
>> Owain
>>
> Yes. I got that far by Googling too. What I want to know is the difference
> in practice.
>
>
AIUI a SCRIP dividend increases the number of shares issued
> In article<7b9c7511-4f8b-41f3...@googlegroups.com>,
> <spuorg...@gowanhill.com> wrote:
>
>> On Saturday, 23 April 2016 16:49:07 UTC+1, Dave Plowman (News) wrote:
>>
>>> What's the difference between SCRIP and DRIP? I know they are both
>>> ways of getting shares in a company you already have shares in instead
>>> of a cash dividend. But why the two?
>>>
>
>> With a Scrip dividend, new shares are issued by the company, which can
>> be acquired by investors instead of a cash dividend payment.
>>
>
>> As part of a DRIP existing shares are purchased in the market which are
>> subject to stamp duty and commission. Any residual cash is retained
>> within the plan.
>>
>
>> https://www.tddirectinvesting.co.uk/help/faqquestions/what-are-drip-and-scrip-dividends/
>>
>
>> Owain
>>
> Yes. I got that far by Googling too. What I want to know is the difference
> in practice.
>
>
thereby devaluing the shares. A DRIP keeps the number of shares constant
and buying in the market will increase the value of the remaining shares.
Rod Speed
Apr 24, 2016, 5:13:13 AM4/24/16
to
"Capitol" <sp...@whereva.uk> wrote in message
news:PeKdnQK96c1BGYHK...@brightview.co.uk...
> Dave Plowman (News) wrote:
>> In article<7b9c7511-4f8b-41f3...@googlegroups.com>,
>> <spuorg...@gowanhill.com> wrote:
>>
>>> On Saturday, 23 April 2016 16:49:07 UTC+1, Dave Plowman (News) wrote:
>>>
>>>> What's the difference between SCRIP and DRIP? I know they are both
>>>> ways of getting shares in a company you already have shares in instead
>>>> of a cash dividend. But why the two?
>>>>
>>
>>> With a Scrip dividend, new shares are issued by the company, which can
>>> be acquired by investors instead of a cash dividend payment.
>>>
>>
>>> As part of a DRIP existing shares are purchased in the market which are
>>> subject to stamp duty and commission. Any residual cash is retained
>>> within the plan.
>>>
>>
>>> https://www.tddirectinvesting.co.uk/help/faqquestions/what-are-drip-and-scrip-dividends/
>>>
>>
>>> Owain
>>>
>> Yes. I got that far by Googling too. What I want to know is the
>> difference
>> in practice.
>>
>>
> AIUI a SCRIP dividend increases the number of shares issued
> thereby devaluing the shares.
Yes, but not by all that much given that the total number of shares
>> In article<7b9c7511-4f8b-41f3...@googlegroups.com>,
>> <spuorg...@gowanhill.com> wrote:
>>
>>> On Saturday, 23 April 2016 16:49:07 UTC+1, Dave Plowman (News) wrote:
>>>
>>>> What's the difference between SCRIP and DRIP? I know they are both
>>>> ways of getting shares in a company you already have shares in instead
>>>> of a cash dividend. But why the two?
>>>>
>>
>>> With a Scrip dividend, new shares are issued by the company, which can
>>> be acquired by investors instead of a cash dividend payment.
>>>
>>
>>> As part of a DRIP existing shares are purchased in the market which are
>>> subject to stamp duty and commission. Any residual cash is retained
>>> within the plan.
>>>
>>
>>> https://www.tddirectinvesting.co.uk/help/faqquestions/what-are-drip-and-scrip-dividends/
>>>
>>
>>> Owain
>>>
>> Yes. I got that far by Googling too. What I want to know is the
>> difference
>> in practice.
>>
>>
> AIUI a SCRIP dividend increases the number of shares issued
> thereby devaluing the shares.
involved is only a small percentage of those already on issue.
> A DRIP keeps the number of shares constant
> and buying in the market will increase the value of the remaining shares.
traded anyway.
Richard
Apr 24, 2016, 5:15:32 AM4/24/16
to
"dennis@home" wrote in message
news:571bcfa8$0$40986$b1db1813$b96d...@news.astraweb.com...
Only if you are not left wing.
news:571bcfa8$0$40986$b1db1813$b96d...@news.astraweb.com...
Dave Plowman (News)
Apr 24, 2016, 6:07:18 AM4/24/16
to
In article <PeKdnQK96c1BGYHK...@brightview.co.uk>,
So are outside your control? If everyone opts for SCRIP, the value of your
shares will be devalued too. So why the choice?
All I was really hoping for was some guidance on the circumstances where
one is better than the other.
--
*If you can't see my mirrors, I'm doing my hair*
shares will be devalued too. So why the choice?
All I was really hoping for was some guidance on the circumstances where
one is better than the other.
--
*If you can't see my mirrors, I'm doing my hair*
Robin
Apr 24, 2016, 7:00:13 AM4/24/16
to
On 23/04/2016 19:56, DJC wrote:
>
>
> I think, if you are being offered a choice of one or the other it
> depends on your tax position and in which jurisdiction you reside. ie as
> a shareholder one will cost you more tax than the other.
>
Yes - but in practice for indivduals in the UK and quoted UK companies
> depends on your tax position and in which jurisdiction you reside. ie as
> a shareholder one will cost you more tax than the other.
>
there is rarely any tax difference between taking cash or "scrip"
dividends. The individual's income for tax purposes is the cash
equivalent of the shares. The cash equivalent is usually just the cash
dividend they could have received. The only exceptions are where there
was no cash alternative offered or the cash was well below the market
value of the shares. Then it's the market value.
--
Robin
reply-to address is (intended to be) valid
Rod Speed
Apr 24, 2016, 7:04:21 AM4/24/16
to
news:5575c58...@davenoise.co.uk...
In the sense of those inevitable results, yep.
> If everyone opts for SCRIP, the value of your
> shares will be devalued too. So why the choice?
Because there are different tax consequences in some jurisdictions.
> All I was really hoping for was some guidance on
> the circumstances where one is better than the other.
Then you should have said that. We don’t read minds.
> If everyone opts for SCRIP, the value of your
> shares will be devalued too. So why the choice?
> All I was really hoping for was some guidance on
> the circumstances where one is better than the other.
Dave Plowman (News)
Apr 24, 2016, 8:42:33 AM4/24/16
to
In article <nfi8pe$cev$1...@dont-email.me>,
But can you then explain the difference in tax terms between SCRIP and
DRIP? Let's say for the sake of argument at the standard tax rate.
--
*A journey of a thousand sites begins with a single click *
DRIP? Let's say for the sake of argument at the standard tax rate.
--
*A journey of a thousand sites begins with a single click *
Robin
Apr 24, 2016, 8:58:08 AM4/24/16
to
On 24/04/2016 12:31, Dave Plowman (News) wrote:
> In article <nfi8pe$cev$1...@dont-email.me>,
> Robin <rb...@hotmail.com> wrote:
>> On 23/04/2016 19:56, DJC wrote:
>
>>>
>>> I think, if you are being offered a choice of one or the other it
>>> depends on your tax position and in which jurisdiction you reside. ie as
>>> a shareholder one will cost you more tax than the other.
>>>
>
>> Yes - but in practice for indivduals in the UK and quoted UK companies
>> there is rarely any tax difference between taking cash or "scrip"
>> dividends. The individual's income for tax purposes is the cash
>> equivalent of the shares. The cash equivalent is usually just the cash
>> dividend they could have received. The only exceptions are where there
>> was no cash alternative offered or the cash was well below the market
>> value of the shares. Then it's the market value.
>
> But can you then explain the difference in tax terms between SCRIP and
> DRIP? Let's say for the sake of argument at the standard tax rate.
>
Yes. See above. In other words, usually none.
> In article <nfi8pe$cev$1...@dont-email.me>,
> Robin <rb...@hotmail.com> wrote:
>> On 23/04/2016 19:56, DJC wrote:
>
>>>
>>> I think, if you are being offered a choice of one or the other it
>>> depends on your tax position and in which jurisdiction you reside. ie as
>>> a shareholder one will cost you more tax than the other.
>>>
>
>> Yes - but in practice for indivduals in the UK and quoted UK companies
>> there is rarely any tax difference between taking cash or "scrip"
>> dividends. The individual's income for tax purposes is the cash
>> equivalent of the shares. The cash equivalent is usually just the cash
>> dividend they could have received. The only exceptions are where there
>> was no cash alternative offered or the cash was well below the market
>> value of the shares. Then it's the market value.
>
> But can you then explain the difference in tax terms between SCRIP and
> DRIP? Let's say for the sake of argument at the standard tax rate.
>
That follows because the DRIP is irrelevant for UK tax purposes: tax is
concerned only with the cash dividend. It doesn't care if the cash is
then used to buy shares in a DRIP.
Robin
Apr 24, 2016, 9:10:25 AM4/24/16
to
On 24/04/2016 13:57, Robin wrote:
<snip>
A couple of caveats in case you take the above as personal financial
advice and sue me ;)
a. please note I am talking about "ordinary" scrip dividends and UK
companies. Other "scrip dividends" can differ - eg from foreign companies;
b. taxation of dividends changes from 2016-17 with no tax on the first
£5,000 of dividends and then rates of:
Basic rate (and non-taxpayers) 7.5%
Higher rate 32.5%
Additional rate 38.1%
<snip>
>>
>> But can you then explain the difference in tax terms between SCRIP and
>> DRIP? Let's say for the sake of argument at the standard tax rate.
>>
>
> Yes. See above. In other words, usually none.
>
> That follows because the DRIP is irrelevant for UK tax purposes: tax is
> concerned only with the cash dividend. It doesn't care if the cash is
> then used to buy shares in a DRIP.
>
PS
>> But can you then explain the difference in tax terms between SCRIP and
>> DRIP? Let's say for the sake of argument at the standard tax rate.
>>
>
> Yes. See above. In other words, usually none.
>
> That follows because the DRIP is irrelevant for UK tax purposes: tax is
> concerned only with the cash dividend. It doesn't care if the cash is
> then used to buy shares in a DRIP.
>
A couple of caveats in case you take the above as personal financial
advice and sue me ;)
a. please note I am talking about "ordinary" scrip dividends and UK
companies. Other "scrip dividends" can differ - eg from foreign companies;
b. taxation of dividends changes from 2016-17 with no tax on the first
£5,000 of dividends and then rates of:
Basic rate (and non-taxpayers) 7.5%
Higher rate 32.5%
Additional rate 38.1%
John Rumm
Apr 24, 2016, 9:17:20 AM4/24/16
to
On 24/04/2016 11:03, Dave Plowman (News) wrote:
> In article <PeKdnQK96c1BGYHK...@brightview.co.uk>,
> Capitol <sp...@whereva.uk> wrote:
>> AIUI a SCRIP dividend increases the number of shares issued
>> thereby devaluing the shares. A DRIP keeps the number of shares constant
>> and buying in the market will increase the value of the remaining shares.
>
> So are outside your control? If everyone opts for SCRIP, the value of your
> shares will be devalued too. So why the choice?
You don't usually get the choice, since a scrip issue is not an everyday
> In article <PeKdnQK96c1BGYHK...@brightview.co.uk>,
> Capitol <sp...@whereva.uk> wrote:
>> AIUI a SCRIP dividend increases the number of shares issued
>> thereby devaluing the shares. A DRIP keeps the number of shares constant
>> and buying in the market will increase the value of the remaining shares.
>
> So are outside your control? If everyone opts for SCRIP, the value of your
> shares will be devalued too. So why the choice?
offering. A company will only typically make a scrip offer if they have
a particular need to retain more cash (for projects, investments,
whatever), or perhaps if they want to lower their share price. Generally
speaking its usually worth taking the scrip offer when available,
otherwise you will see the value of you holding lowered (at least
temporarily). However if you portfolio is too heavily biased to the
company in question, then the cash alternative for reinvestment
elsewhere makes some sense (or for that matter if you need the cash
yourself).
Drip is (IIUC) always available - and does not require any extraordinary
action from the company. Its a good way to build your total holding in a
company, and keeps you invested for the longest time possible. (However
see notes previous about too much exposure to a single holding)
> All I was really hoping for was some guidance on the circumstances where
> one is better than the other.
portfolio, and want it to generate income then either take the cash in
the first place, or setup drip for that holding and sell shares as you
require (the latter only really worth it in a rising market, since
although you will avoid some charges on purchase, you will incur them on
selling).
With a scrip issue, there may be strings on how long you need to hold
the shares, but usually they are worth taking unless you think its a
company that's on the ropes and you were planning to get out anyway.
(Note there are possibly CGT issues that I have not thought through -
especially in light of recent changes to taxation of dividend income)
DJC
Apr 24, 2016, 1:31:04 PM4/24/16
to
On 24/04/16 12:31, Dave Plowman (News) wrote:
> In article <nfi8pe$cev$1...@dont-email.me>,
> Robin <rb...@hotmail.com> wrote:
>> On 23/04/2016 19:56, DJC wrote:
>
>>>
>>> I think, if you are being offered a choice of one or the other it
>>> depends on your tax position and in which jurisdiction you reside. ie as
>>> a shareholder one will cost you more tax than the other.
>>>
>
>> Yes - but in practice for indivduals in the UK and quoted UK companies
>> there is rarely any tax difference between taking cash or "scrip"
>> dividends. The individual's income for tax purposes is the cash
>> equivalent of the shares. The cash equivalent is usually just the cash
>> dividend they could have received. The only exceptions are where there
>> was no cash alternative offered or the cash was well below the market
>> value of the shares. Then it's the market value.
>
> But can you then explain the difference in tax terms between SCRIP and
> DRIP? Let's say for the sake of argument at the standard tax rate.
>
Probably none. The option may be there because the company has
> In article <nfi8pe$cev$1...@dont-email.me>,
> Robin <rb...@hotmail.com> wrote:
>> On 23/04/2016 19:56, DJC wrote:
>
>>>
>>> I think, if you are being offered a choice of one or the other it
>>> depends on your tax position and in which jurisdiction you reside. ie as
>>> a shareholder one will cost you more tax than the other.
>>>
>
>> Yes - but in practice for indivduals in the UK and quoted UK companies
>> there is rarely any tax difference between taking cash or "scrip"
>> dividends. The individual's income for tax purposes is the cash
>> equivalent of the shares. The cash equivalent is usually just the cash
>> dividend they could have received. The only exceptions are where there
>> was no cash alternative offered or the cash was well below the market
>> value of the shares. Then it's the market value.
>
> But can you then explain the difference in tax terms between SCRIP and
> DRIP? Let's say for the sake of argument at the standard tax rate.
>
shareholders not in UK. I am not the expert in this but a few years ago
there was something similar with my shares in Standard Life. A large
amount of paperwork giving lots of detail but in the end it came down to
the alternative only being relevant if you were in the USA.
Dave Plowman (News)
Apr 25, 2016, 8:43:04 AM4/25/16
to
In article <nfivm9$71d$1...@dont-email.me>,
Its basically just a few shares I bought in BG when they were privatized
all those years ago. And hung on to with all the changes. The latest one
is 'them' being acquired by Royal Dutch Shell. And this option being
given. With the last owner, I'd already done something similar - shares
instead of cash some years ago. But there wasn't this choice between SCRIP
and DRIP then.
The dividend is usually a smallish sum, so I'd rather go for an increase
in the capital value.
--
*How much deeper would the oceans be without sponges? *
DJC <d...@news.invalid> wrote:
> > But can you then explain the difference in tax terms between SCRIP and
> > DRIP? Let's say for the sake of argument at the standard tax rate.
> >
> Probably none. The option may be there because the company has
> shareholders not in UK. I am not the expert in this but a few years ago
> there was something similar with my shares in Standard Life. A large
> amount of paperwork giving lots of detail but in the end it came down to
> the alternative only being relevant if you were in the USA.
Ah. That makes some sense.
> > But can you then explain the difference in tax terms between SCRIP and
> > DRIP? Let's say for the sake of argument at the standard tax rate.
> >
> Probably none. The option may be there because the company has
> shareholders not in UK. I am not the expert in this but a few years ago
> there was something similar with my shares in Standard Life. A large
> amount of paperwork giving lots of detail but in the end it came down to
> the alternative only being relevant if you were in the USA.
Its basically just a few shares I bought in BG when they were privatized
all those years ago. And hung on to with all the changes. The latest one
is 'them' being acquired by Royal Dutch Shell. And this option being
given. With the last owner, I'd already done something similar - shares
instead of cash some years ago. But there wasn't this choice between SCRIP
and DRIP then.
The dividend is usually a smallish sum, so I'd rather go for an increase
in the capital value.
--
*How much deeper would the oceans be without sponges? *
RJH
Apr 25, 2016, 9:16:14 AM4/25/16
to
On 25/04/2016 13:42, Dave Plowman (News) wrote:
> In article <nfivm9$71d$1...@dont-email.me>,
> DJC <d...@news.invalid> wrote:
>>> But can you then explain the difference in tax terms between SCRIP and
>>> DRIP? Let's say for the sake of argument at the standard tax rate.
>>>
>
>> Probably none. The option may be there because the company has
>> shareholders not in UK. I am not the expert in this but a few years ago
>> there was something similar with my shares in Standard Life. A large
>> amount of paperwork giving lots of detail but in the end it came down to
>> the alternative only being relevant if you were in the USA.
>
> Ah. That makes some sense.
>
> Its basically just a few shares I bought in BG when they were privatized
> all those years ago.
That revelation should silence those cruel souls intent on labelling you
> In article <nfivm9$71d$1...@dont-email.me>,
> DJC <d...@news.invalid> wrote:
>>> But can you then explain the difference in tax terms between SCRIP and
>>> DRIP? Let's say for the sake of argument at the standard tax rate.
>>>
>
>> Probably none. The option may be there because the company has
>> shareholders not in UK. I am not the expert in this but a few years ago
>> there was something similar with my shares in Standard Life. A large
>> amount of paperwork giving lots of detail but in the end it came down to
>> the alternative only being relevant if you were in the USA.
>
> Ah. That makes some sense.
>
> Its basically just a few shares I bought in BG when they were privatized
> all those years ago.
'socialist' :-)
--
Cheers, Rob
Dave Plowman (News)
Apr 25, 2016, 9:41:14 AM4/25/16
to
In article <nfl54e$roi$1...@dont-email.me>,
But I was dressed in all over grey and reading the little red book when I
bought them, though. ;-)
--
*Re-elect nobody
bought them, though. ;-)
--
*Re-elect nobody
DJC
Apr 25, 2016, 3:21:58 PM4/25/16
to
On 25/04/16 13:42, Dave Plowman (News) wrote:
> In article <nfivm9$71d$1...@dont-email.me>,
> DJC <d...@news.invalid> wrote:
>>> But can you then explain the difference in tax terms between SCRIP and
>>> DRIP? Let's say for the sake of argument at the standard tax rate.
>>>
>
>> Probably none. The option may be there because the company has
>> shareholders not in UK. I am not the expert in this but a few years ago
>> there was something similar with my shares in Standard Life. A large
>> amount of paperwork giving lots of detail but in the end it came down to
>> the alternative only being relevant if you were in the USA.
>
> Ah. That makes some sense.
Part of the problem is that all the financial regulation these days
> In article <nfivm9$71d$1...@dont-email.me>,
> DJC <d...@news.invalid> wrote:
>>> But can you then explain the difference in tax terms between SCRIP and
>>> DRIP? Let's say for the sake of argument at the standard tax rate.
>>>
>
>> Probably none. The option may be there because the company has
>> shareholders not in UK. I am not the expert in this but a few years ago
>> there was something similar with my shares in Standard Life. A large
>> amount of paperwork giving lots of detail but in the end it came down to
>> the alternative only being relevant if you were in the USA.
>
> Ah. That makes some sense.
means they can't just say in plain language that one option is best for
X and another in case Y. So you have to filter a lot of detail to get to
the nub of it.
>
> Its basically just a few shares I bought in BG when they were privatized
> all those years ago. And hung on to with all the changes. The latest one
> is 'them' being acquired by Royal Dutch Shell. And this option being
> given. With the last owner, I'd already done something similar - shares
> instead of cash some years ago. But there wasn't this choice between SCRIP
> and DRIP then.
>
> The dividend is usually a smallish sum, so I'd rather go for an increase
> in the capital value.
>
--
Capitol
Apr 26, 2016, 11:09:50 AM4/26/16
to
Dave Plowman (News)
Apr 26, 2016, 12:08:27 PM4/26/16
to
In article <pOydnaf34dMmGYLK...@brightview.co.uk>,
I've heard of poor Capitalists, though. They're called UKIP.
--
*Nothing is foolproof to a sufficiently talented fool*
--
*Nothing is foolproof to a sufficiently talented fool*
0 new messages