Enhanced Scrip Dividend

The procedure for entering enhanced scrip dividends is essentially the same as for stock dividends. There are two minor differences.

1. Enhanced scrip dividends do not involve a fractional amount of cash if the stock is chosen.

1. Because the stock choice is always more attractive than the cash choice, some clients who want the cash choose the stock but arrange to sell it immediately through their broker. This is treated as a ‘small value’ disposal for CGT.

The cash choice, which is usually unattractive, is:

Movement code	CGT/Accounting rule	Description
ESD	V1/Income/Expense	ESD cash dividend

The stock choice is:

Movement code	CGT/Accounting rule	Description
ESF	V8/Income/Expense	ESD foregone dividend
ESS	A3/Normal Purchase	ESD new shares option (pre 6/4/98)
ESN	A1/Normal Purchase	Enhanced Scrip New (from 6/4/98)
ESB	A4/Ask SoR Treatment	ESD new shares broker purchase

With the stock choice there is always an ESF entry; there is one of ESS or ESN, and there will be an ESB entry if the stock is immediately sold. If the Autopost is being used, the equivalent events in the Security History are:

Enhanced scrip dividend – cash dividend	corresponding to the ESD mvt code
ESD – foregone dividend amount (net)	corresponding to ESF
ESD – new shares option	corresponding to ESS or ESN
ESD – new shares option (broker purchase)	corresponding to ESB

As with the ordinary stock dividend it is not possible to tick all of these when the Autopost is run. The client must choose between cash and stock and, if the stock is chosen, whether it was sold immediately.