Hidden extras

Article Abstract:

United Kingdom split-capital investment trusts cannot be judged using the normal methods for judging trusts. The different types of split stocks carry hidden risks. Split-capital trusts cannot be assessed using their discounts, where calculations are based on final redemption values rather than current pricesin the market. Trusts that are wound up have debts repaid using values current when they are wound up, not final values. Split-capital trusts should be assessed on their redemtion yields. Discounts tend to ignore the trusts' debts.

Finance, Stocks

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Buy-back frenzy among investment trusts

Article Abstract:

United Kingdom investment trusts can buy-back their own stocks more easily following the end of advance corporation tax from April 6 1999. This removes the obligation for companies buying back stocks to pay tax on any rise in price since stocks were issued to the time when stocks were bought back. Investment trusts hope that stock buy-backs can help ease wide discounts, which have been a problem for some years. It is unclear, however, whether buy-backs will in fact ease the discount problem.

Public Finance Activities, Tax Administration, Taxation, Tax administration and procedure

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