CGT rise may harm ZDP resurgence

As coalition Government proposes a major rise in CGT, investment trust managers express concern for zeros

A rise in capital gains tax could kill off the resurgence of zero dividend preference share issues, say investment trust experts. The new coalition Government is proposing to raise CGT to as much as 50%. ZDPs or zeros accrue income over their life, but only pay out to investors when they are redeemed. The return is classed as a capital gain, rather than income, which is taxed at a higher level. Investment trust professionals say the increase will reduce the attraction of the share class for investors. F&C’s Peter Hewitt, whose Progressive Growth fund invests primarily in ZDPs, s...