Taxation of Capital Distribut

RNS Number : 1304S

Investors Capital Trust PLC

03 September 2010

 



Investors Capital Trust plc (the "Company")

B Shares - proposed legislative changes to the taxation of capital distributions

The Company is aware of the Government's current legislative proposals to change the treatment for UK taxation purposes of capital distributions made by companies (under the proposed new section 1027A of the Corporation Tax Act 2010).

The Company has been advised that these proposals would cause the quarterly capital distributions which are paid in respect of the Company's B shares to be treated as income distributions for the purposes of UK income tax rather than being taxed under capital gains tax rules. Such proposed treatment would mean that the receipt of B share distributions would be taxed in an identical manner to dividends paid on the A shares.   This change in tax treatment would, under the current proposals, be effective in relation to capital distributions paid on or after 22 June 2010. Accordingly, this change in tax treatment would apply in relation to the capital distributions which were paid by the Company in August 2010 and to all future quarterly distributions paid in respect of the B shares.

The Company has been advised that the draft legislation relates solely to the tax treatment of the capital distributions and does not affect the legal treatment of the Company's capital structure. Accordingly, the Company's A and B share capital structure is not affected and can continue to provide the benefit for all shareholders of an increase in the level of income that the Company is able to distribute.

This proposed change in tax treatment, which is broader in scope than market participants expected, is subject to a consultation process and there is no certainty that the proposed legislative changes will be enacted in their current form. The Company is aware that a number of interested bodies with concerns have made representations to HMRC.

The final form of the proposed legislation is expected to be published in the autumn with any legislation being enacted at that time and the Directors will consider its implications, if any, for the Company.

Enquiries:

Rodger McNair, Investment Manager          Tel: [phone]

Michael Campbell, Company Secretary       Tel: [phone]

 

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