Nominee Accounts ref VCT Shareholdings

[Quart01]

I've just opened a Nominee Account with a Stockbroker for the purposes of holding some of my VCT shares ahead of selling them through VCT buy-back processes.

One question arising: When shares are put in a nominee account does this have any consequences for tax treatment ? Specifically, I want to ensure that the dividends I receive (ahead of any future sale) continue to be tax free and b) that I don't mess up the initial 30% tax relief I received on subscription if I transfer in any VCT shares which are less than 5 years old.

Unsurpisingly, there's not much literature available on this niche topic and the stockbroker is loathe to give tax advice ....

So, looking to fellow Lemon Foolers for help on this

[yorkshirelad1]

I've just opened a Nominee Account with a Stockbroker for the purposes of holding some of my VCT shares ahead of selling them through VCT buy-back processes.

One question arising: When shares are put in a nominee account does this have any consequences for tax treatment ? Specifically, I want to ensure that the dividends I receive (ahead of any future sale) continue to be tax free and b) that I don't mess up the initial 30% tax relief I received on subscription if I transfer in any VCT shares which are less than 5 years old.

Unsurpisingly, there's not much literature available on this niche topic and the stockbroker is loathe to give tax advice ....

So, looking to fellow Lemon Foolers for help on this

When I originally moved all my holdings (incl VCTs) into a broker nominee, there was a problem with tax deducted at source on the VCT dividends (when that applied). It's a while ago, and the memory is hazy, but I seem to remember it was something to do with the fact that the registrar could only see the corporate nominee as shareholder and couldn't identify them as having the tax benefits on dividends, and the broker's nominee couldn't cope with the tax relief on VCT dividends etc. It got very complicated, so I just pulled the VCTs out of the nominee. I ended up putting the VCTs back into certificated, because I had no intention of selling (at the time) and it meant I had a direct connection with the VCT, and the registrar and got all communications (which is handy, given that one of them is Chrysalis VCT, which is currently liquidating, so I get updates, which my broker wasn't very good at passing through).

[UncleEbenezer]

There's a VCT board on Lemonfool where we've discussed issues like this over the years. I moved all my VCTs to a nominee account a few years ago, and nowadays when I subscribe for new shares they too go straight into the nominee account (an option that hasn't existed for very long). Saves dealing with nightmare registrars!

If you care about exercising shareholder rights, you might want to check whether your broker is happy to facilitate them. Mine does when asked, but I don't know if that's universal.

[cprof]

Just a couple of potential issues.

1) I am fairly certain that VCT shares in nominee accounts cannot have dividends paid as new shares (DRIS) attracting the 30% tax relief.
2) If you have VCT shares and other shares in the same nominee account, the year end tax statement may not report the dividends for VCT and non-VCT shares seperately, which means you have to do the calculations for tax submission ( not impossible but a chore). This is the case for Interactive Investor and I keep two accounts one of them just for VCT's .

[Quart01]

I can confirm that my stockbroker confirmed your point 1. You cannot have DRIS arrangements when your VCT shares are held in a CREST nominee account.