1nvest wrote:
High net worth investors often look to minimise taxable events such as dividends.
They don't want forced returns of capital (such as dividends) and would rather just sell enough shares/assets to generate their own 'dividend' out of total return.
https://www.lemonfool.co.uk/viewtopic.php?f=21&t=23356&start=120#p309242
On this thread, I would like to investigate if the basis for the above opinion is as clear cut as 1nvest seems to indicate, without spoiling the above 'Total Return' thread with another off-topic discussion.
My questions for 1nvest would be -
1. Given that both capital gains and dividends can be ignored for tax-purposes where they might occur within an ISA wrapper, and given the length of time such ISA wrappers (or their earlier equivalents) have been available for long-term investors to utilise, how much more of a 'taxable event problem' do you think dividends are to many 'long-term high net worth' investors, over and above any potential 'capital harvesting' processes, which may equally be described as 'taxable events', but don't seem to influence your thoughts on this matter in the same way?
2. Is your 'dividend taxable-events (bad) vs capital-harvesting taxable events (good)' view specifically driven by those who you only might consider to be 'High net worth investors', and would you consider the same comparison to be of much less importance for investors that might not consider themselves 'High net worth', but are still looking to provide some or all of their future income by way of ISA dividends, rather than non-ISA dividends?
The reason that I ask the above is that whilst I wouldn't consider myself to be a 'High net worth investor' when compared to many other investors on this site, I do think the medium-term outlook that I'm aiming for is hopefully looking to provide me with a tax-free dividend income that's going to cover a large proportion of my post-retirement income requirements, and, specifically, that's likely to be achieved without being concerned at all about those dividends giving me any 'taxable events' outside of the current £2,000 dividend allowance...
So whilst I may not be 'High net worth' to some here, I would certainly consider myself to be 'High-enough net worth' for that situation to be favourable for me in the way I wish to take my future dividend income, and it seems that you think that 'dividend taxable events' should influence me not to think that way.
Can you please explain why?
Cheers,
Itsallaguess