Scrip Dividend Scheme

Trustees
This section assumes, as is likely to be the case, that New Shares received by trustees if they elect
to receive the dividends under the Scheme will be income in the hands of the trustees for trust
law purposes. Trustees who are liable to income tax at the rate applicable to trusts of 40 per cent
will only pay tax on dividends received at the rate of 32.5 per cent. Where such trustees elect to
receive new ordinary shares, the same grossing-up procedure as outlined above for individuals
will apply. Thus, the trustees will be treated as having received gross income of an amount which,
when reduced by income tax at the rate of 10 per cent, is equal to the cash equivalent. The
trustees will then be liable to pay additional tax of 22.5 per cent of the grossed up amount of
the cash equivalent. Subject to what is said above in relation to the determination of the cash
equivalent of the New Shares, this is the same treatment as for cash dividends. For such trustees
the capital gains tax treatment of the New Shares will be the same as that for individuals
(see above).
The position in relation to an interest in possession trust is understood to be as follows but
trustees of any such trust should consult their professional adviser regarding the tax position
before taking action. If the trustees elect to receive New Shares instead of a cash dividend, they
will not be subject to income tax on these New Shares. The individual beneficiary with an
interest in possession will be beneficially entitled to the New Shares and will be subject to income
tax on them in the way outlined above. The capital gains tax position in these circumstances will
be that the New Shares will not form part of the trustees existing holding but will be treated as
a new holding acquired by the relevant beneficiary for an amount equal to the cash equivalent
of the New Shares (as defined above).
Companies
A corporate shareholder is not generally liable to corporation tax on cash dividends and will not
be charged to corporation tax on New Shares received instead of a cash dividend. For the
purposes of corporation tax on chargeable gains, no consideration will be treated as having been
given for the New Shares which will be treated as having been acquired when the existing
Ordinary Shares in the enlarged holding were acquired.
Pension Funds
Where pension funds elect to receive the dividend under the Scheme no tax credit will attach to
the New Shares. Pension funds would not be able to claim repayment of the tax credit on the
equivalent cash dividend.
Stamp Duty and Stamp Duty Reserve Tax
No stamp duty or stamp duty reserve tax will be payable on the receipt of New Shares under the
Scheme.
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