HSBC 2009 Annual Report Download - page 482

HSBC HOLDINGS PLC
Shareholder Information (continued)
Where more information is available / Taxation of shares and dividends
480
Where more information about
HSBC is available
This Annual Report and Accounts 2009, and other
information on HSBC, may be viewed on HSBC’s
website: www.hsbc.com.
Reports, statements or information that HSBC
Holdings files with the Securities and Exchange
Commission are available at www.sec.gov. Investors
can also request hard copies of these documents
upon payment of a duplicating fee, by writing to the
SEC at the Office of Investor Education and
Advocacy, 100 F Street N.E., Washington, DC
20549-0123 or by emailing [email protected].
Investors should call the Commission at (202) 551
8090 if they require further assistance. Investors may
also obtain the reports and other information that
HSBC Holdings files at www.nyse.com (telephone
number (1) 212 656 3000).
Taxation of shares and dividends
Taxation – UK residents
The following is a summary, under current law, of
the principal UK tax considerations that are likely
to be material to the ownership and disposition of
shares. The summary does not purport to be a
comprehensive description of all the tax
considerations that may be relevant to a holder of
shares. In particular, the summary deals principally
with shareholders who are resident in the UK for
UK tax purposes and only with holders who hold
the shares as investments and who are the beneficial
owners of the shares, and does not address the tax
treatment of certain classes of holders such as
dealers in securities. Holders and prospective
purchasers should consult their own advisers
regarding the tax consequences of an investment
in shares in light of their particular circumstances,
including the effect of any national, state or local
laws.
Taxation of dividends
Currently no tax is withheld from dividends paid by
HSBC Holdings. However, dividends are paid with
an associated tax credit which is available for set-off
by certain shareholders against any liability they
may have to UK income tax. Currently, the
associated tax credit is equivalent to 10 per cent
of the combined cash dividend and tax credit, i.e.
one-ninth of the cash dividend.
For individual shareholders who are resident
in the UK for taxation purposes and liable to UK
income tax at the basic rate, no further UK income
tax liability arises on the receipt of a dividend from
HSBC Holdings. Individual shareholders who are
liable to UK income tax at the dividend higher rate
or additional rate (which applies for the tax year
2010-11 and subsequent years) on UK dividend
income (currently 32.5 per cent and 42.5 per cent)
are taxed on the combined amount of the dividend
and the tax credit. The tax credit is available for
set-off against the higher rate and additional rate
liability. Individual UK resident shareholders are
not entitled to any tax credit repayment.
Although non-UK resident shareholders are
generally not entitled to any repayment of the tax
credit in respect of any UK dividend received, some
such shareholders may be so entitled under the
provisions of a double taxation agreement between
their country of residence and the UK. However, in
most cases no amount of the tax credit is, in practice,
repayable.
Information on the taxation consequences of the
HSBC Holdings scrip dividends offered in lieu of the
2008 fourth interim dividend and the first, second
and third interim dividends for 2009 was set out in
the Secretary’s letters to shareholders of 31 March,
3 June, 1 September and 1 December 2009. In the
case of the 2008 fourth interim dividend, the
difference between the cash dividend foregone and
the market value of the scrip dividend exceeded
15 per cent of the market value. Accordingly, the
amount of the dividend income chargeable to tax,
and, the acquisition price of HSBC Holdings
US$0.50 ordinary shares (the ‘shares’) for UK
capital gains tax purposes, was the market value of
£5.39 per share. In each other case the difference
was less than 15 per cent and the price of the shares
was the cash dividend foregone.
Taxation of capital gains
The computation of the capital gains tax liability
arising on disposals of shares in HSBC Holdings by
shareholders subject to UK tax on capital gains can
be complex, partly depending on whether, for
example, the shares were purchased since April
1991, acquired in 1991 in exchange for shares in
The Hongkong and Shanghai Banking Corporation
Limited, or acquired subsequent to 1991 in exchange
for shares in other companies.
For capital gains tax purposes, the acquisition
cost for ordinary shares is adjusted to take account
of subsequent rights and capitalisation issues. Any
capital gain arising on a disposal by a UK company
may also be adjusted to take account of indexation
allowance. If in doubt, shareholders are
recommended to consult their professional advisers.