Shares

Shares

Shares are issued by companies who wish to raise money. The best known shares are bought and sold daily on international Stock Markets. There are several different types of share but the most common are simply called ordinary shares.

A shareholder will normally receive a dividend twice a year which is related to the profitability of the company. It is the board of directors who decide how much the dividend will be in any given year. Dividends can be raised, lowered or stopped altogether, but past experience has shown that over the medium to long-term they tend to rise, thereby giving investors some protection against inflation.

When a dividend is distributed to a client the tax voucher issued will show the ‘deemed gross dividend’. The client will only receive 90% of this amount but it is the deemed gross dividend that is assessed to determine whether any further income tax is due. That leaves different tax payers in the following situation.

• Higher rate tax payers – a further 32.5% liability.
• Basic rate tax payers – no further liability.
• Non tax payers – cannot reclaim.

In the short-term share prices may fluctuate in response to changes in opinion about the company itself or the general outlook for business and the economy as a whole. However, in the medium to long-term, past experience has shown the tendency for share values to rise i.e. capital growth. This helps protect the real value of the investor’s capital against inflation. Please note past performance is not a guide to future performance.

Selling shares may produce a capital gain for investors ie. the value realised at the sale may be greater than the value at the time of purchase. A capital gain realised on the sale of shares is potentially liable to Capital Gains Tax. Capital losses may be set against gains for tax purposes. Investing in individual shares can be risky and picking the wrong company could mean losing some or all of the original investment.

We would point out that Surrey Financial Advice act only as introducers for arrangements in relation to the purchase of Shares and no fee is charged to you for this introduction.

The information set out on this page is intended to provide a general appreciation of the topic and it is not advice. Guidance should be sought from a specialist who is qualified to advise in your specific circumstances.

For more information on any aspect of Shares please contact Surrey Financial Advice on 01483 211800 or email us at admin@surreyifa.co.uk  We will be happy to assist you.