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> The tax treatment of dividends is less favourable. They changed this a while back, didn't they? "Qualified dividends, on the other hand, are taxed at the ca
by gwd 7y ago
> The tax treatment of dividends is less favourable.
They changed this a while back, didn't they? "Qualified dividends, on the other hand, are taxed at the capital gains rates, which are lower." [1]
AFAIK the only tax advantage of dividends now is that you're forced to pay tax every year, rather than being able to pay tax only once when you actually sell your shares. (Do let me know if there's something I'm missing.)
[1] https://smartasset.com/taxes/dividend-tax-rate https://smartasset.com/taxes/dividend-tax-rate
- CPLX 7y agoThat difference makes for a BIG advantage it should be noted.
- pjc50 7y agoMost of the shares are held by institutions, which have different capital gains rules; e.g. https://citywire.co.uk/investment-trust-insider/news/what-is-the-difference-between-investment-trusts-and-investment-companies/a1199743 https://citywire.co.uk/investment-trust-insider/news/what-is... UK investment trusts are exempt from CGT.
- donavanm 7y agoIt’s a big difference in practice. Dividends force a taxable event. The event may also force those dividends to be treated as income. The buyback increases the value of held assets. By choosing when to sell you can control the tax rate, the realize gains or losses, and time it in conjunction with other gains/losses to minimize the total tax burden. Those are very real opportunity costs.