The Lemon Fool

Perhaps an odd question but hopefully someone can help on this.

In the early years of VCTs I remember some VCTs issued distinct capital and income dividends. Certainly while I was in the US (as an expat in the late 'noughties') the former were treated as tax free because they were repayment of capital.

Now I am back in the UK I have some non-qualifying VCT dividends (from an over subscription of shares in one tax year). I have to pay tax on these dividends of course. My question is therefore the following:

- Does anyone know if the separate categorisation of dividends still exist (I haven't noticed any recently) and, if it does not, was there a specific point in time when this practice was suspended by the VCTs or the Government ?

I hope that question is clear

Quart01 wrote:Perhaps an odd question but hopefully someone can help on this.

In the early years of VCTs I remember some VCTs issued distinct capital and income dividends. Certainly while I was in the US (as an expat in the late 'noughties') the former were treated as tax free because they were repayment of capital.

Now I am back in the UK I have some non-qualifying VCT dividends (from an over subscription of shares in one tax year). I have to pay tax on these dividends of course. My question is therefore the following:

- Does anyone know if the separate categorisation of dividends still exist (I haven't noticed any recently) and, if it does not, was there a specific point in time when this practice was suspended by the VCTs or the Government ?

I hope that question is clear

My VCT investments started in 2005, and I can't remember any such division of dividends. So I suspect you will need to get replies from VCT investors dating further back - possibly to their introduction in 1995.

scotia wrote:My VCT investments started in 2005, and I can't remember any such division of dividends. So I suspect you will need to get replies from VCT investors dating further back - possibly to their introduction in 1995.

That's longer than me, and I do remember them. A VCT would declare a dividend of 2.5p, being 1p income and 1.5p capital. Or whatever.

I'm not sure whether or when they stopped, as I wouldn't normally pay attention to that in the reports. Nor could I say how general it ever was: it may only ever have been a few of them. I think I've seen it in IT divis too, though obviously more rarely.

To the OP: if you don't get a general-purpose answer here, perhaps you could ask the VCT in question if they have the figures for you? But I'd guess that if they've stopped, it may be precisely because it makes no difference under today's rules (erm ... and you're into the realms of nice problem to have there).

UncleEbenezer wrote:

scotia wrote:My VCT investments started in 2005, and I can't remember any such division of dividends. So I suspect you will need to get replies from VCT investors dating further back - possibly to their introduction in 1995.

That's longer than me, and I do remember them. A VCT would declare a dividend of 2.5p, being 1p income and 1.5p capital. Or whatever.

At my age memory is unreliable.
I keep paper records of dividends of those VCTs which I still own - but since I usually re-cycle VCTs after a 5 year hold, then I fear that these will be of no help.

I believe that all VCT dividends are still paid from varying proportions of capital and income return and those details are normally provided at the time the dividend is declared.

To UK tax payers it makes no difference whether the dividend is paid from capital or income..

If one bought more than £100k of shares in a year prior to 2004/5 or from then more than £200k then the dividends are taxable. II assume that relates to the dividends from shares over the limit at the time but I am not sure. I believe that buying more than these limits can also affect one's liability to CGT on those shares.

May I suggest that you consider selling such shares as are necessary to bring your holdings down below the limits and buying new VCT shares this year, thus getting up-front relief as well as disposing of historic liabilities? Of course if you were using CGT deferral then that course of action may not be so attractive.

Thanks for the responses. I do intend to sell some of the tainted (oversubscribed) shares creating "non-qualifying dividends" on which tax has to be paid to make my life easier.

Is the rate of VCT dividends slowing down? I hold a diverse range of VCTs, and the only ones I currently see with declared dividends are Maven4 (2p per share on 7Oct) and Octopus AIM2 (2.1p per share on 10Nov).

In October and November in previous years we saw Amati, Hargreave Hale, Pembroke, Maven5, maybe some others, pay dividends. Are my usual sources letting me down and dividends have been declared and I’m not seeing them? Am I being impatient and this is just random noise on dividend timings? Or in these troubled economic times, are dividends going to be less often / smaller? Hopefully I’m worrying over nothing!

Not sure about the questions in the last post but, reply to the OP:

I hold Prosus N.V. and they've just issued a capital dividend.

To be more precise, they declared a divi and have given holders the option of receiving it as capital (default, they describe it as tax free) or electing to receive an ordinary taxable dividend instead (not sure why)

whatafool wrote:Is the rate of VCT dividends slowing down? I hold a diverse range of VCTs, and the only ones I currently see with declared dividends are Maven4 (2p per share on 7Oct) and Octopus AIM2 (2.1p per share on 10Nov).

In October and November in previous years we saw Amati, Hargreave Hale, Pembroke, Maven5, maybe some others, pay dividends. Are my usual sources letting me down and dividends have been declared and I’m not seeing them? Am I being impatient and this is just random noise on dividend timings? Or in these troubled economic times, are dividends going to be less often / smaller? Hopefully I’m worrying over nothing!

With our VCTs, there have been a spate of dividends in July and August - so maybe it will be quieter in the later months.
8/7/22 Mobeus I&G4 4p
8/7/22 Mobeus The I & G 4p
12/7/22 British Smaller Cos 2p
15/7/22 Maven 1 1.25p
22/7/22 Amati 4.5p
29/7/22 Pembroke 5p
5/8/22 Proven 3.75p
5/8/22 Proven G&I 3.25p
26/8/22 Molten Ventures 3.1p
11/8/22 Unicorn Aim 35p
12/8/22 Octopus Aim 3p
12/8/22 Northern Venture 2p
17/8/22 Northern 3 3p
19/8/22 Northern 2 1.6p
26/8/22 Molten Ventures 3.1p
26/8/22 Maven 3 1.25p
26/8/22 Maven 5 3p
12/8/22 Octopus Aim 3p
9/9/22 Baronsmead 1 3p
9/9/22 Baronsmead 2 3p
and confirmed to come
3/10/22 British Smaller Cos 2p
7/10/22 Maven 4 2p
10/11/22 Octopus Aim 2 2.1p

Looking back over previous years, we might expect further Amati and Pembroke Dividends, and possibly Proven Dividends, before the end of the year - although none have yet been announced. However, the final months of the year do tend to be poorer months for (our) VCT Dividends

scotia wrote:Looking back over previous years, we might expect further Amati and Pembroke Dividends, and possibly Proven Dividends, before the end of the year - although none have yet been announced. However, the final months of the year do tend to be poorer months for (our) VCT Dividends

Indeed, my traditional bigger months are January and the summer months, though those will diminish with the demise of Ventus. Huge this year because Ventus (Jan) and Unicorn extra-special (Aug). There's still a decent trickle, with another 6p from Mobeus 4 announced only today. Looking back, October is often my thinnest month. And bear in mind some - like the Albion family - don't announce divis this far in advance.

UncleEbenezer wrote: with another 6p from Mobeus 4 announced only today.

Thanks - Noted

scotia wrote:

UncleEbenezer wrote: with another 6p from Mobeus 4 announced only today.

Thanks - Noted

Followed in the same day by Kings Arms Yard, declaring a modest October divi uncharacteristically early.

UncleEbenezer wrote:

scotia wrote:

UncleEbenezer wrote: with another 6p from Mobeus 4 announced only today.

Thanks - Noted

Followed in the same day by Kings Arms Yard, declaring a modest October divi uncharacteristically early.

And the Income & Growth, for November. Three declared in one day, and that's just among the VCTs I hold

I'm expecting Triple Point (e shares) in October(announced 12/9) and as has previously been mentioned Maven 4.
Usually get something from Octopus Titan and, Proven and Proven G & I in November December, but nothing heard yet.

Re the Albion Family -

AADV announced on 31/08 2nd interim of 2.34p payable 30/09, xd 09/09

AATG should announce results in mid-September for xd and payment in December

CRWN should announce results towards end of September for xd and payment in November

AAVC should announce results in December for payment in January.

All based upon previous years.

IJ