Vodafone shareholders have until the 20th February 2014 to decide how they would like to receive payment from the company’s deal with US Telecom Company Verizon.
Shareholders have two choices: 1. Receive as Income 2. Receive as Capital
By receiving the payment as income you will be liable to income tax at your marginal rate on the value of the payment.
By receiving the payment as capital you will be liable to capital gains tax (“CGT”) at a rate of 33% on the gain. However in the majority of cases there will be a loss arising and therefore no CGT will arise (this would need to be confirmed by your tax advisor). Therefore in most cases it will be preferable to treat the payment as capital.
What to do now:
In order to treat the payment as capital you need to return the Form of Election (which you should have received in the post) to Computershare by the 20th February 2014 and elect to receive the payment as capital. If you do not return the Form of Election by this date you will be treated as receiving the payment as income and it will be subject to income tax at your marginal rate (possibly as high as 55%).
If in doubt please contact your tax advisor or call Quintas on 021 4641400 and ask for Dave O’Brien, Tax Manager.