buying USA shares via online broker

MarcoM

Hi,

I am trying to buy some USA shares via HL but I have to fill in a form W-8BEN form to reduce the tax due in the USA.
Does this mean that any income or gain from said shares will be taxed in the USA anyway even though at a lower rate?

Thanks

Steve182

W-8Ben reduces dividend withholding tax from 30% to 15%

If held in a SIPP there is no withholding tax on divis

There is no US tax on capital gain, only UK tax, which can be avoided, along with UK tax on divis, by holding them in a tax shelter like an ISA or SIPP 

MarcoM

Hi Steve, so no tax is taken at the USA side?

Steve182

MarcoM said:

Hi Steve, so no tax is taken at the USA side?

You asked about tax on income (divis are considered income) and capital gain. That's 2 questions, and there are 2 different answers

Divis -

This depends on how you hold the shares. In what type of online account will they be held? Dealing account, ISA or SIPP?

US will take 15% withholding tax (withheld at source) on divis, unless the shares are held in a SIPP, in which case there is no tax. I avoid paying withholding tax by putting any dividend paying US shares I own in my SIPP rather than my ISA

Capital gain -

Capital gains are treaded differently to divis and are not taxed at the US side. 

MarcoM

hi, so the witholding tax is not applied in a sipp but is applied within an ISA wrapper?

MarcoM

Hi,

I'll bump this one.

does one need to pay dividend tax on USA shares held within an ISA?

Thanks

wmb194

MarcoM said:

Hi,

I'll bump this one.

does one need to pay dividend tax on USA shares held within an ISA?

Thanks

Yes. It's only within a pension that they're exempt from US withholding tax.