Barclays 2007 Annual Report Download - page 289

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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 (currently 32.5%) against which can be offset a
tax credit of one-ninth of the cash dividend received. Tax credits are not
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 (expected to
be withdrawn for disposals after 5th April 2008). 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 or civil partners) 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
Stamp duty or stamp duty reserve tax at the rate of 0.5% is normally
payable on the purchase price of shares acquired.
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.
Barclays PLC Annual Report 2007 287
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 PLC or the Bank, as applicable, 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 2011 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 (or, in the case of preference shares or ADSs relating
thereto, if the dividend is attributable to a period or periods aggregating
over 366 days, provided that the holder holds the shares or ADSs for more
than 90 days during the 181-day period beginning 90 days before the ex-
dividend date) and meets certain other holding period requirements.
Dividends paid by Barclays or the Bank, as applicable, with respect to the
ordinary or preference 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 or the Bank. 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. For foreign tax credit purposes, dividends will
generally be income from sources outside the United States and will,
depending on a US holder’s circumstances, be either ‘passive’ or ‘general’
income for purposes of computing the foreign tax credit allowable to a US
holder.
The amount of the dividend distribution includable in income 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 and will
not be eligible for the special tax rate applicable to qualified dividend
income.
Distributions in excess of 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.