Companies Set to Bring Forward Dividends

January 12, 2010 by admin
Filed under: Economic Outlook

Many UK companies are drawing up plans to accelerate the payment of dividends in a move that would allow wealthy private shareholders to avoid the impact of the new top tax rate due to take effect from April.
Tax advisers said the decision earlier this week by Rathbone Brothers, the listed wealth manager, to pay a so-called second interim dividend in March rather than a final dividend in May was likely to prompt others to make a similar move.
Ted Baker, the fashion retailer, and Arbuthnot Banking Group are among those considering following Rathbones’ example, the Financial Times has learnt. In both cases, directors own a substantial chunk of the equity.
Many private and public companies were due to pay a dividend after the cut-off date. By bringing forward the payment, shareholders could save substantial sums in tax.
Tax experts said that smaller, private companies were more likely to make such a move than public counterparts with a high share of institutional investors. Some companies may be unwilling to do so due to the disruption to cash flow, given that dividends must be paid from retained earnings.

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