The first dividend is payable on 30 September and will be worth 9.45p. Investors who hold shares in a PEP can receive that tax free, but the shares must be switched into a PEP no later than 42 days after the allocation was announced. The deadline is 29 August but PEP plan managers are urging investors to return the necessary paperwork earlier than this.
The managers need to re-register the shares in a nominee name in order for the shares to receive dividends tax free. They are setting deadlines as early as Wednesday, for receipt of the necessary PEP transfer form, which is on the back of share certificates.
Many BT3 investors will have bought through share shops and have already arranged the transfers. But some investors need to find a manager to take the shares either into a single company plan, which has an annual investment limit of pounds 3,000, or a self- select PEP, with a a pounds 6,000 limit.
Someone who bought through a share shop and has not yet made arrangements for transfer should return there for the transfer as there will be no switching charge. Not all share shops manage PEPs, however.
Although the dividends on BT3 shares are generous investors still need to look closely at PEP charges to ensure they do not outweigh the tax savings on their holdings.
Among those that will transfer BT3 shares into PEPs are Killik & Co. Someone who applied for shares through Killik will pay no transfer fee but others will pay 1 per cent of the fully-paid share value. When the second and third instalments are paid there is a charge of 0.6 per cent of the fully paid value. There will be flat fees of pounds 7.50 each time a dividend is paid.
The Share Centre levies no charges for switches into PEPs by BT3 investors. Single company PEPs charge pounds 25 annually and general self-select PEPs pounds 60.
'We are seeing a lot of PEPs being opened at the moment and all the activity is on BT3,' said Gavin Oldham, chief executive of The Share Centre.
Sharelink has no initial switching charge. The annual fee is 0.75 per cent of the value of the PEP at the year end, with a minimum of pounds 20. This applies to single and general self-select PEPs. The deadline for receiving the transfer forms is 25 August.
Reyker Securities needs to receive shares by next Wednesday. The firm charges an initial fee of pounds 11.75 for people who did not buy their shares through it. For single company and general PEPs, the annual charge is 1 per cent of the plan value from the second year.
Killik & Co, 071-589 1577; The Share Centre 0442 890 800; Sharelink, 021-200 2242. Reyker Securities, 071-499 9097.Reuse content