Barclays 2004 Annual Report Download - page 248

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Shareholder information
Taxation of UK holders
Taxation of dividends
In accordance with UK law, Barclays PLC and the Bank pay dividends
on ordinary shares and preference shares without any deduction or
withholding tax in respect of any taxes imposed by the UK government
or any UK taxing authority.
If the shareholder is a UK resident individual liable to income tax only
at the basic rate or the lower rate, then there will be no further tax
liability in respect of the dividend received. If, however, the individual
shareholder is subject to income tax at the higher rate (currently
40%), there will be a further liability to tax. Higher rate taxpayers
are taxable on dividend income at a special rate of (currently 32.5%)
against which can be offset a tax credit of one-ninth of the dividend
paid. Tax credits are no longer repayable to shareholders with no
tax liability.
Taxation of shares under the Dividend Reinvestment Plan
Where a shareholder elects to purchase shares using their cash
dividend, the individual will be liable for income tax on dividends
reinvested in the Plan on the same basis as if they had received
the cash and arranged the investment themselves. They should
accordingly include the dividend received in their annual tax return
in the normal way. The tax consequences for a UK individual are the
same as described in ‘Taxation of dividends’ above.
Taxation of capital gains
Where shares are disposed of by open market sale, a capital gain may
result if the disposal proceeds exceed the sum of the base cost of the
shares sold and any other allowable deductions such as share dealing
costs, indexation relief (up to 5th April 1998) and taper relief
(generally on shares held at 16th March 1998 and subsequent
acquisitions). To arrive at the total base cost of any Barclays PLC
shares held, the amount subscribed for rights taken up in 1985 and
1988 must be added to the cost of all other shares held. For this
purpose, current legislation permits the market valuation at
31st March 1982 to be substituted for the original cost of shares
purchased before that date.
The calculations required to compute chargeable capital gains,
particularly taper and indexation reliefs, may be complex. Capital gains
may also arise from the gifting of shares to connected parties such as
relatives (although not spouses) and family trusts. Shareholders are
advised to consult their personal financial adviser if further
information regarding a possible tax liability in respect of their
holdings of Barclays PLC shares is required.
Stamp duty
On the purchase of shares, stamp duty or stamp duty reserve tax
at the rate of 0.5% is normally payable on the purchase price of
the shares.
Inheritance tax
An individual may be liable to inheritance tax on the transfer of
ordinary shares or preference shares. Where an individual is liable,
inheritance tax may be charged on the amount by which the value
of his or her estate is reduced as a result of any transfer by way of gift
or other gratuitous transaction made by them or treated as made
by them.
Taxation of US holders
Taxation of dividends
A US holder is subject to US federal income taxation on the gross
amount of any dividend paid by Barclays out of its current or
accumulated earnings and profits (as determined for US federal
income tax purposes). Dividends paid to a non-corporate US holder
in taxable years beginning before 1st January 2009 that constitute
qualified dividend income will be taxable to the holder at a maximum
tax rate of 15%, provided that the holder has a holding period of the
shares or ADSs of more than 60 days during the 121-day period
beginning 60 days before the ex-dividend date. Dividends paid by
Barclays with respect to the shares or ADSs will generally be qualified
dividend income.
A US holder will not be subject to UK withholding tax. The US holder
will include in gross income for US federal income tax purposes the
amount of the dividend actually received from Barclays.
Dividends must be included in income when the US holder, in the
case of shares, or the Depositary, in the case of ADSs, actually or
constructively receives the dividend, and will not be eligible for the
dividends-received deduction generally allowed to US corporations in
respect of dividends received from other US corporations. Dividends
will be income from sources outside the US, and will generally be
‘passive income’ or ‘financial services income,’ which is treated
separately from other types of income for the purposes of computing
any allowable foreign tax credit.
The amount of the dividend distribution will be the US Dollar value
of the pound Sterling payments made, determined at the spot Pound
Sterling/US Dollar rate on the date the dividend distribution is
includable in income, regardless of whether the payment is in fact
converted into US Dollars. Generally, any gain or loss resulting from
currency exchange fluctuations during the period from the date the
dividend payment is includable in income to the date the payment is
converted into US Dollars will be treated as ordinary income or loss
and, for foreign tax credit limitation purposes, from sources within
the US.
Distributions in excess of Barclays current or accumulated earnings
and profits, as determined for US federal income tax purposes, will
be treated as a return of capital to the extent of the US holder’s basis
in the shares or ADSs and thereafter as capital gain.
Taxation of capital gains
Generally, US holders will not be subject to UK tax, but will be subject
to US tax on capital gains realised on the sale or other disposition
of ordinary shares, preference shares or ADSs. Capital gain of a
non-corporate US holder that is recognised before 1st January 2009
is generally taxed at a maximum rate of 15% where the holder has
a holding period of greater than one year.
Taxation of premium on redemption or purchase of shares
No refund of tax will be available under the Treaty in respect of any
premium paid on a redemption of preference shares by the Bank or
on a purchase by Barclays PLC of its own shares. For US tax purposes,
redemption premium generally will be treated as an additional amount
realised in the calculation of gain or loss.