Hargreaves Lansdown issue with US direct shareholdings

Zukalwe

Hi Folks,

I'm brand new to the site but have been reading voraciously to get my sore, confused head around investment and pensions and the various brokers and the deals they offer. Have recently come into some money so want to invest for the long-term after the crash. The majority of my investment will be anchored around direct high-yield shareholding of UK and US equities.

I have recently opened an Hargreaves Lansdown SIPP in which to buy shares and funds. However, unlike my HSBC Investdirect sharetrading account, HL have refused to process the W-8BEN form required by US tax authorities in order to withhold only 15% of dividend tax from direct shareholding rather than the standard 30% (as per UK/US tax treaty). I have not seen this mentioned anywhere on site, despite much searching. I was quite taken aback by this as I expected these forms to be standard practise for brokers. Unless I am missing something (likely!) then I will have to move out of HL to a broker that will handle these USA tax forms as my accountant has advised that reclaiming this tax lost through a USA tax return claim can be time-consuing and costly - in any case it seems preferable to maximise the tax process by having it economised at source rather than have to reclaim later.

Has anyone else encountered this or similar problems? Perhaps I am missing something - would there be any payoff benefit from UK tax liability (ie UK would offset the total 30% paid against UK liability) which might help as I am a higher rate taxpayer?

Any help on this matter would be appreciated. As well as the HL account I currently have a standard sharedealing (US & UK) account with HSBC Investdirect and an IFA advised Transact pension which is only invested in ISA-chosen funds. I decided to open an HL SIPP too as I wanted to invest with my own fund choices and directly in shares too - HL seemed to be the best all-round lowest-cost option for this, also avoiding the IFA commision that comes with Transact, with the share yield return representing the lowest-cost portion of my total portfolio (albeit higher risk), which was an important consideration in gaining high-yield compound returns over the 20 odd years until I am at pensionable age. Overall I have about £150,000 spread roughly equally over the three accounts.

I fear I have no viable choice here but to abandon HL, unless anyone can point out any flaws in my assessment of the situation. If so I need to find a broker that provides the following features for standard share accounts, ISAs and SIPPs: Limit orders, USA tax form processing, good gain/loss and other portfolio evaluation statistics and tools and DRIP - preferably without incurring standard dealer charges for this. HSBC did not provide DRIP but rather a SCRIP service for qualifying shares which seems to have been useful, paying my dividends in new shares without incurring a dealing charge, but I am not sure if anyone would provide BOTH those features, though that would be nice! As I have a fairly large sized portfolio I am not too worried about one-off dealing charges but I would like to find a broker now that I can set up with long-term without realising again in a few months that I have missed something critical as I believe I may have done with HL.

Comments much appreciated - this is a helluva learning curve!

vj1983

i have the same problem with iii who refuse to accept the w8ben.
i have contact irs who have not replied and keep going around in circles. i think it goes against treatinf customer fairly where brokers dont specify this clearly to customers and then dont help rectify the issue

sabretoothtigger

W-8BEN form required by US tax authorities in order to withhold only 15% of dividend tax from direct shareholding rather than the standard 30% (as per UK/US tax treaty).

Useful to know thanks



Dont trade shares with HL is best as they are not competitive in any way on this front