The Lemon Fool

Hello Fools,

I personally take my VCT dividends in cash to help fund my living expenses, but a friend has asked me if he can claim tax relief on new VCTs shares that he would get if he chooses the DRIS option. I don't know the answer to that question - can anybody here help?

Many thanks,

Gostevie

Yes he can.
If he does, he will receive dividend payment certificates that state both the dividend paid and the amount subscribed for new shares (usually the same sum), and hence have a second function as an income tax relief certificate.
Tax back is claimed in the usual way - either via letter/email, or end of year tax return.
Simples.

Thanks! That is very helpful.

I take my dividends as DRIS when available. Just one word of caution, Baronsmead ( and maybe others ) offer a dividend reinvestment Plan (DRIP), where your dividend is used by a broker to buy shares in the market. You will not get income tax relief on such purchases,

Agreed. I have raised this issue with Baronsmead more than once, as I believe that it catches many investors out. They are an outlier. The stock response is that the costs of setting up a DRIS prejudice most shareholders. I do not buy that argument and I think that Baronsmead should reconsider.