Questions of Cash: What should I do with these Rolls-Royce shares?


Q. I have a personal equity plan containing Rolls-Royce ordinary shares.

Q. I have a personal equity plan containing Rolls-Royce ordinary shares. My PEP manager tells me that Rolls-Royce is undergoing a capitalisation issue of redeemable B shares in July, when 50 will be allocated for every one ordinary share held at March last year. I can redeem these redeemable B shares immediately at 0.1p per share, with the £80 proceeds credited to my PEP; convert them to ordinary shares "at a price based on the market value on a date determined by the directors of Rolls-Royce"; or do nothing until future redemption/conversion opportunities arise, which are expected in July and January each year. What should I do?
NP, Christchurch.

A. Make your judgement based on what you expect to happen to the company's share price because redemption at future times will be based on the prevailing market price of ordinary shares. Liam Hopkins of the independent financial adviser Hargreaves Lansdown says: "Rolls-Royce has issued B shares as a novel way of paying a dividend. It is more for the benefit of the company than the shareholder. It is more tax-efficient for RR to pay a capital distribution in shares than cash. The shareholder has similar options, just as if they had received a cash dividend: they can immediately redeem the shares for cash (which is liable for capital gains tax); they can convert the B shares into RR ordinary shares (as if it were a scrip dividend); or they can keep the shares and have similar opportunities when B shares are next issued.

"They will receive 50 B shares per share, valued at 0.1p, that is a 5p dividend. If they choose to convert them into ordinary shares, they can do so at whatever the price is on the conversion date, which has been set at 212p, so you will need 2,120 B shares for each new RR share." Ben Melling, a tax partner at the accountant Grant Thornton, adds that an increasing number of listed companies are issuing redeemable shares. In this instance there is no tax consequence: the PEP is CGT-free and even if you held them outside a tax-free structure the amount of gain would be below the CGT threshold of £8,200.

Q. My husband and I have had a joint account with Lloyds TSB for 16 years. I use my maiden name professionally and our joint account uses that name. Our Lloyds TSB mortgage uses my married name and recently the bank gave us a reference using my married name. But my local branch refused to credit our joint account with a cheque for £6,000 issued to us in our married names, returning the cheque by post.

Because of a bank holiday this lost us a week's interest, before the bank credited the account on the basis that my husband's name was on the cheque. In a letter, the Bromley branch said that the Banking Act requires people using both maiden and married names to operate two bank accounts. This seems bizarre, but I suppose it must be true. MF, Norfolk.

A. No it is not. First, banks' duties are now governed by the Financial Services and Markets Act, not the Banking Act. Second, banks are not prevented from allowing a married woman to use her married and maiden name through the same bank account providing there is proof, usually the marriage certificate, that the names relate to the same person and that other requirements of proof of identity and address are met. Many banks do this although some may choose for operational reasons not to allow customers to use two names. Lloyds TSB says its branches should accept cheques into a single account using a customer's married and maiden names, subject to the relevant checks. The bank said it will remind its staff of procedures. Lloyds TSB apologises for the error and is sending £25 in compensation for your loss of interest and inconvenience.

I had my will drawn up 18 months ago by a local firm of solicitors. I am a single woman and wanted to leave money in trust to my nieces. I was told that I couldn't because I am single. Is this true? AC, Lewes

Get yourself new solicitors. No, it is not true. The specialist trust lawyer Stephen Pallister, of Charles Russell solicitors, says: "We have freedom to dispose of our assets on death how we like in England." The exception is where existing dependents are not properly provided for, when they can bring claims for family provision.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Sport
Australia vs New Zealand live
cricket Follow over-by-over coverage as rivals New Zealand and Australia face off
News
Zayn has become the first member to leave One Direction. 'I have to do what feels right in my heart,' he said
peopleWe wince at anguish of fans, but his 1D departure shows the perils of fame in the social media age
Life and Style
Researchers found that just 10 one-minute swill-and-spit sessions are enough to soften tooth enamel and make teeth vulnerable to erosion
health
News
i100
Arts and Entertainment
The Regent Street Cinema’s projection room in the 1920s
film
News
Leah Devine is only the ninth female to have made the Young Magician of the Year final since the contest began more than 50 years
peopleMeet the 16-year-old who has set her heart on being the first female to win Young Magician of the Year
News
Jonathan Anderson was born in Northern Ireland but now based between London, where he presents a line named JW Anderson
peopleBritish designer Jonathan Anderson is putting his stamp on venerable house Loewe
News
Andy Davidhazy at the beginning (left) and end (right) of his hike
video
News
Taylor Swift is applying to trademark song lyrics from 1989
people
Voices
The popularity of TV shows such as The Liver Birds encouraged Liverpudlians to exaggerate their Scouse accent
voicesWe exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor
Finacial products from our partners
Property search
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Retirement Coordinator - Financial Services

    Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

    Recruitment Genius: Annuities / Pensions Administrator

    Negotiable: Recruitment Genius: You will be the first point of contact for all...

    Ashdown Group: HR, Payroll & Benefits Officer - Altrincham - up to £24,000.

    £18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...

    Ashdown Group: Learning and Development Programme Manager

    £35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...

    Day In a Page

    Election 2015: How many of the Government's coalition agreement promises have been kept?

    Promises, promises

    But how many coalition agreement pledges have been kept?
    The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

    The death of a Gaza fisherman

    He built his own reef, and was fatally shot there by an Israeli gunboat
    Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

    Saudi airstrikes are fuelling the Gulf's fire

    Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
    Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

    The only direction Zayn could go

    We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
    Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

    Spells like teen spirit

    A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
    Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

    If fashion is a cycle, this young man knows just how to ride it

    British designer Jonathan Anderson is putting his stamp on venerable house Loewe
    Number plates scheme could provide a licence to offend in the land of the free

    Licence to offend in the land of the free

    Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
    From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

    From farm to fork in Cornwall

    One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
    Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

    Robert Parker interview

    The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
    Don't believe the stereotype - or should you?

    Don't believe the stereotype - or should you?

    We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor
    How to make your own Easter egg: Willie Harcourt-Cooze shares his chocolate recipes

    How to make your own Easter egg

    Willie Harcourt-Cooze talks about his love affair with 'cacao' - and creates an Easter egg especially for The Independent on Sunday
    Bill Granger recipes: Our chef declares barbecue season open with his twist on a tradtional Easter Sunday lamb lunch

    Bill Granger's twist on Easter Sunday lunch

    Next weekend, our chef plans to return to his Aussie roots by firing up the barbecue
    Joe Marler: 'It's the way I think the game should be played'

    Joe Marler: 'It's the way I think the game should be played'

    The England prop relives the highs and lows of last Saturday's remarkable afternoon of Six Nations rugby
    Cricket World Cup 2015: Has the success of the tournament spelt the end for Test matches?

    Cricket World Cup 2015

    Has the success of the tournament spelt the end for Test matches?
    The Last Word: Justin Gatlin knows the price of everything, the value of nothing

    Michael Calvin's Last Word

    Justin Gatlin knows the price of everything, the value of nothing