Buying USA stocks from a UK ISA

sho_me_da_money

I know how to do buy the stocks but I was wondering what tax I pay on any gains and at what point? Does the tax automatically get deducted when I sell? Any ideas how it works please?

eskbanker

ISA status shelters you from UK income tax on dividends and capital gains tax on growth, but US withholding tax will be automatically deducted from dividend payments, although you can mitigate this from 30% down to 15% by submitting a W-8BEN form.

sho_me_da_money

eskbanker said:

ISA status shelters you from UK income tax on dividends and capital gains tax on growth, but US withholding tax will be automatically deducted from dividend payments, although you can mitigate this from 30% down to 15% by submitting a W-8BEN form.

Thanks for this. So i have completed a W8BEN on my brokers site. What im wondering is (and apologies for asking again) - say I invest 10K GBP in Amazon and the stock went to 20K GBP next year. When I sell my stock with my broker, will that 15% be subtracted at that time? So I end up getting £17,000?

eskbanker

sho_me_da_money said:

eskbanker said:

ISA status shelters you from UK income tax on dividends and capital gains tax on growth, but US withholding tax will be automatically deducted from dividend payments, although you can mitigate this from 30% down to 15% by submitting a W-8BEN form.

Thanks for this. So i have completed a W8BEN on my brokers site. What im wondering is (and apologies for asking again) - say I invest 10K GBP in Amazon and the stock went to 20K GBP next year. When I sell my stock with my broker, will that 15% be subtracted at that time? So I end up getting £17,000?

No, the withholding tax is only deducted from dividend payments, not sale proceeds (or even just the gain element).

In your hypothetical example, you'd receive the full value of the shares on selling, less dealing costs, etc, and subject to currency fluctuations of course, but hopefully you're not seriously anticipating 100% annual growth from a share purchase! 

What sort of due diligence have you carried out ahead of buying US stocks, as opposed to diversified alternatives that often suit newbies better?

sho_me_da_money

eskbanker said:

sho_me_da_money said:

eskbanker said:

ISA status shelters you from UK income tax on dividends and capital gains tax on growth, but US withholding tax will be automatically deducted from dividend payments, although you can mitigate this from 30% down to 15% by submitting a W-8BEN form.

Thanks for this. So i have completed a W8BEN on my brokers site. What im wondering is (and apologies for asking again) - say I invest 10K GBP in Amazon and the stock went to 20K GBP next year. When I sell my stock with my broker, will that 15% be subtracted at that time? So I end up getting £17,000?

No, the withholding tax is only deducted from dividend payments, not sale proceeds (or even just the gain element).

In your hypothetical example, you'd receive the full value of the shares on selling, less dealing costs, etc, and subject to currency fluctuations of course, but hopefully you're not seriously anticipating 100% annual growth from a share purchase! 

What sort of due diligence have you carried out ahead of buying US stocks, as opposed to diversified alternatives that often suit newbies better?

Ahh wow. Ok so zero tax to pay if the company I am buying into offers no dividends.

Basically you are saying that buying a USA stock in an ISA with a company with no dividends is like buying a UK stock in an ISA with no dividends. Meaning (and sorry to put it like a 5 year old) - I only pay the standard buy/sell fees?