Charles Stanley's Peters: The pros and cons of IT dividend rule change

It has been almost one year on since the introduction of new dividend rules for investment trusts that enabled UK-domiciled ITs to pay out capital gains as income.

Take-up has been limited since the rules became effective last April, however, with just 26 companies to date gaining shareholder permission to put the new dividend powers to work, according to broker J.P. Morgan Cazenove. Stephen Peters, an investment trust analyst at Charles Stanley, takes the view all investment companies should seek shareholder approval for such powers, so they at least have the option of paying out capital gains as income. For long-term shareholders in mainstream trusts, however, the implementation of such changes could seen them hit in the pocket, according to t...