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Question

What is a Special Dividend?

Answer

A company may, on occasion, elect to distribute reserves of capital to shareholders in the form of a special dividend. The payment is outside of their normal dividend cycle and at the complete discretion of the company. It can be a standalone payment or as a supplement to a scheduled dividend payment.

For example, an interim dividend of 20p per share may be supplemented by a special dividend of 10p per share, resulting in a total payout to the client of 30p per share. A special income dividend will attract the same taxation treatment as an ordinary dividend.

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