HARGREAVES Lansdown, the investment advisory giant, is to hand its shareholders a special dividend to maximise returns before the top rate of income tax jumps in April.
The Bristol-based company announced the unusual move as it revealed a nine per cent increase in pre-tax profits to £39.8m for the six months to the end of December.
Investors will receive an extra 1.6p per share on top of a standard interim dividend of 8p in March, shortly before the highest tax band rises from 40 per cent to 50 per cent.
In a statement, the group said it was appropriate “to pay as much dividend as possible prior to the end of the current tax year” given the 10 per cent hike and uncertainty surrounding the outcome of the next election.
Assets under management at the UK’s largest private client house rose 58 per cent to £15.6bn following last year’s resurgence in equity markets. Although revenue was up 14 per cent to £74.6m, chief executive Peter Hargreaves told City A.M. margins would come under pressure while interest rates remained low.
The broker of individual savings accounts and self-invested personal pensions said clients moved back into shares in the period, with equity allocation rising from 25 per cent to 27 per cent on average. Hargreaves said the lure of emerging markets returns and Fidelity’s forthcoming China fund run by Anthony Bolton should see the appetite continue to grow.
“The UK is a comatose economy,” he added. “It’s going to take a decade to pay off all this debt Gordon Brown has saddled us with, so investors are looking at other places in the world.”