DIVIDEND paid in shares not cash

[Silvabod]

next HBOS dividend will be paid in shares, per the LloydsTSB merger news release.

Two questions of general interest
1/ Will "dividend tax" be deducted, as would be the case if it were a normal dividend
2/ For tax return purposes, what is the "income" value, if any?

A share's value on a specific day (dividend declaration date) could be wildly different to its value when actually transferred as dividend to the shareholder, several weeks later.
If substantially less, (and already reduced by "tax") the shareholder is penalised by a double whammy!

[twix123]

With the new scrip certificate you should receive a Notional Tax Voucher which will state the cash equivalent of the new shares allotted and the amount of UK Income Tax treated as paid

[twix123]

Sorry Silvabod I gave you some incorrect information. As this distribution is a Capitalisation Issue and not a dividend it is not subject to income tax. Please see the following Q & A from HBOS

http://www.hbosplc.com/shareholders/Capitalisa tionIssueQ&As.asp

Regarding a share's value on a given day penalising a holder with a double whammy, by the same token share prices can also rise, giving a gain which will only be crystallized when sold but subject to Capital Gains Tax if applicable.

Much will depend on the terms of the Lloyds TSB offer and subsequent market events