National Grid 2008 Annual Report Download - page 20

BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 48769
Name: NATIONAL GRID
Date: 17-JUN-2008 03:10:51.35Operator: BNY99999TPhone: [phone]Site: BOWNE OF NEW YORK
Y59930.SUB, DocName: 20-F, Doc: 1, Page: 14
7/5014.00.00.00Y59930BNY
[A/E] EDGAR 2 *Y59930/014/5*
BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 48769
Name: NATIONAL GRID
Date: 17-JUN-2008 03:10:51.35Operator: BNY99999TPhone: [phone]Site: BOWNE OF NEW YORK
Y59930.SUB, DocName: 20-F, Doc: 1, Page: 14
7/5014.00.00.00Y59930BNY
[A/E] EDGAR 2 *Y59930/014/5*
Table of Contents
Such holder, however, is generally entitled to foreign tax credit, subject to certain limitations, against any
US federal tax liability for the amount of any UK tax (namely capital gains tax in the case of an individual and
corporation tax on chargeable gains in the case of a corporation) which has been paid in respect of such gain.
A US Holder who becomes resident in the UK after a period of temporary non-residence (of up to five years)
following an earlier period of residence in the UK is also potentially liable to UK capital gains tax on gains made in
the period of temporary non-residence.
A US Holder must also comply with the limitation on benefits article in the Income Tax Convention in order to
obtain treaty benefits.
In addition, a tax loss on future sales of shares may be characterised as long-term capital loss if some or all of a
US Holder’s dividends are characterised as an “extraordinary dividend”. This characterisation may result depending
on the proportionate amount of the dividend compared with the cost basis in the shares.
UK Stamp Duty and Stamp Duty Reserve Tax (‘SDRT’)
Transfers of ordinary shares — Broadly, SDRT at the rate of 0.5% of the amount of value of the consideration is
payable where an agreement to transfer ordinary shares is not completed by a duly stamped transfer to the transferee.
Where an instrument of transfer is executed and duly stamped before the expiry of the period of six years beginning
with such date, the SDRT liability will be cancelled, and any SDRT which has been paid will be refunded. SDRT is
due whether or not the agreement or transfer of such chargeable securities is made or carried out in the UK and
whether or not any party to that agreement or transfer is a UK resident. Purchases of ordinary shares completed by
execution of a stock transfer form will generally give rise to a liability to UK stamp duty at the rate of 0.5% (rounded
up to the nearest £5) of the amount or value of the consideration. Paperless transfers under the CREST paperless
settlement system will generally be liable to SDRT at the rate of 0.5%, and not stamp duty. The transfer of ordinary
shares where there is no change of beneficial ownership will generally attract fixed rate stamp duty of £5 per transfer.
However, if the Finance Bill 2008 is enacted in its current form, any such transfer executed on or after 13 March
2008 will not attract stamp duty. SDRT is generally the liability of the purchaser and UK stamp duty is usually paid
by the purchaser or transferee.
Transfers of ADSs — No UK stamp duty will be payable on the acquisition or transfer of existing ADSs or
beneficial ownership of ADSs, provided that any instrument of transfer or written agreement to transfer is executed
outside the UK and remains at all times outside the UK. An agreement for the transfer of ADSs in the form of ADRs
will not give rise to a liability for SDRT. On a transfer of ordinary shares from the London, England office of The
Bank of New York as agent of the Depositary (the ‘Custodian’) to a holder of ADSs upon cancellation of the ADSs,
only a fixed stamp duty fee of £5 per instrument of transfer will be payable. However, if the Finance Bill 2008 is
enacted in its current form, any such transfer executed on or after 13 March 2008 will not attract stamp duty. Any
transfer for value of the underlying ordinary shares represented by ADSs may give rise to a liability on the transferee
to UK stamp duty or SDRT. A charge to stamp duty or SDRT may arise on the issue or transfer of ordinary shares to
the Depositary or the Custodian. The rate of stamp duty or SDRT will generally be 1.5% of either (i) in the case of an
issue of ordinary shares, the issue price of the ordinary shares concerned, or (ii) in the case of a transfer of ordinary
shares, the value of the consideration or, in some circumstances, the value of the ordinary shares concerned. The
Depositary will generally be liable for the stamp duty or SDRT. In accordance with the terms of the Depositary
Agreement, the Depositary will charge any tax payable by the Depositary or the Custodian (or their nominees) on the
deposit of ordinary shares to the party to whom the ADSs are delivered against such deposits. If the stamp duty is not
a multiple of £5, the duty will be rounded up to the nearest multiple of £5.
US Information Reporting and Backup Withholding
A US Holder who holds ADSs may in certain circumstances be subject to information reporting to the IRS and
possible US backup withholding at a rate of 28% with respect to dividends on ADSs and proceeds from the sale or
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• a US corporation which is otherwise carrying on business through a permanent establishment in the UK and
used, held or acquired ADSs or ordinary shares for the purpose of such permanent establishment.