Should wealth managers be wary of new IT dividend powers?

Following a change in legislation to allow dividends to be paid from capital profits, questions have been raised as to how the distribution powers will be used - if at all - by the investment trust world. Kira Nickerson reports.

Lowland and Finsbury Growth & Income are the latest investment trusts to seek shareholder approval to distribute dividends from capital, holding a vote on the issue at their respective AGMs. Since the tax change was made to company law in April 2012 it is estimated less than a dozen trusts have added the capability, which is seen by many as merely a flexible investment management tool. However, with high demand for income expected to continue, that number is likely to increase. Annabel Brodie Smith, director of communications at the AIC, commented that the removal of the prohibition o...