Wednesday 22 October 2008

Reader's letter of the day

From the FT:

No more dividends - no tax to pay

Sir, I inherited some shares in Royal Bank of Scotland from my mother many years ago. Since then I have reinvested all the dividends in the bank's dividend reinvestment scheme. I had, though, to pay tax on those reinvested dividends.

Now for the good news. No more dividends - no more tax to pay! And when I come to dispose of the shares, at a knockdown price, just think of that big capital gains tax loss*!

James Macdonald, Ickleton, Cambs, UK


* Or indeed a smaller loss or a larger capital gain taxed at much lower rates than the dividends would have been. To be read in conjunction with my earlier post.

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