Under the spotlight: Zero dividend preference shares

James Saunders Watson, head of marketing, investment trusts at J.P. Morgan Asset Management, explains how zero dividend preference shares offer capital growth and predictability of return without liability to income tax.

Imagine an investment that could give your clients capital growth and predictability of return at a predetermined date in the future without liability to income tax. Sounds too good to be true? Well, while nothing can be absolutely certain, an investment in zero dividend preference shares could go a long way towards ticking the above boxes, and as such could be useful for anyone investing to cover known future liabilities, such as school or university fees. What is a zero? A zero dividend preference share, also called a ‘zero’ or ZDP, is a type of share offered by some split-capital ...