Witholding tax / tax treaties USA - UK

Adyinvestment

Just invest any dividend paying US stocks in a SIPP, no withholding tax so nothing to think about



*edited to add this would depend on your personal tax situation etc*

GeoffTF

Adyinvestment said:

Just invest any dividend paying US stocks in a SIPP, no withholding tax so nothing to think about

*edited to add this would depend on your personal tax situation etc*

That depends on your broker. AJ Bell is said to be good in this regard.

bostonerimus

pecunianonolet said:

eskbanker said:

It's the former, the £60 would be credited against your tax liability.

So I essentially don't pay any tax at all? First, I reduce liability from 30% to 15% using that W-8BEN form. Second, the 15% I pay in the US I can offset. 
--> So I essentially no tax at all? Seems too good to be true.

bostonerimus said:

Why do you want/need to involve yourself in the wonderful world of US taxation, tax treaties and W-8BENs? There are plenty of UK investment funds...

Because the fund I have in mind is no longer listed in the EU with USD nomination. The equivalent Euro one is. Not sure if things have changed now since UK is no longer part of EU and the USD one is available again. Wanted to understand taxation before I dig deeper.

https://www.franklintempleton.com/investments/options/mutual-funds/products/105/A/templeton-growth-fund-inc/TEPLX

US is going into the next round of debt increase negotiations. With some Republican rebels, warnings from Yellen, this could get to a showdown similar to the recent speaker elections. The US would need to stop paying pension funds to remain functioning, at least until June they can survive that way. Looming recession, inflation, war in Ukraine, etc. could, especially if they not find agreement to increase the debt allowance (Republicans want major cuts in social welfare payments before they would agree, the rebels are unpredictable.) send the USD down and the fund is at a low level so seems a not too bad an opportunity to invest long term. 

Alternative suggestions are welcome :-) 

What is your citizenship and where do you live? The fund you link is not going to be UK reporting, so assuming you are a UK tax resident you will have to deal with UK tax on a non-reporting fund as well as the US tax compliance ie W-8BENs etc. Also the fees on that fund are pretty high and how exactly do you plan to buy a US mutual fund?

Adyinvestment

GeoffTF said:

GeoffTF said:

That depends on your broker. AJ Bell is said to be good in this regard.

After getting a little excited and not really thinking about this when I got seriously into investing I am slowly moving dividend investments around to the below format.


*Assuming you are going to own everything anyway*

Dividend paying US investments SIPP first any left over would be ISA, but not GIA unless desperate to own them and all else was full, and then I would be looking to rotate them into the SIPP as soon as practical so as to leave the £500 UK dividend allowance for any UK shares.

Dividend paying UK investments ISA or SIPP depending on yearly tax circumstances and room, if everything was full then a GIA, and then also looking to rotate them into ISA/SIPP.

If there is a better way of doing this I would welcome to be corrected, also this does of course assume a rosy future where the annual limits are coming into play 

With a little luck this could be more relevant in the near future as I believe the UK government is working with the US to allow UK investors to buy US funds/etf's etc (a side effect of Brexit)

EdSwippet

bostonerimus said:
... how exactly do you plan to buy a US mutual fund?

That, I believe, will be the showstopper. US domiciled mutual funds do not sell to non-US customers. (US domiciled ETFs do, but thanks to EU/UK PRIIPs rules, UK or EU residents cannot buy them anyway.)

GeoffTF

Adyinvestment said:

GeoffTF said:

GeoffTF said:

That depends on your broker. AJ Bell is said to be good in this regard.

After getting a little excited and not really thinking about this when I got seriously into investing I am slowly moving dividend investments around to the below format.


*Assuming you are going to own everything anyway*

Dividend paying US investments SIPP first any left over would be ISA, but not GIA unless desperate to own them and all else was full, and then I would be looking to rotate them into the SIPP as soon as practical so as to leave the £500 UK dividend allowance for any UK shares.

Dividend paying UK investments ISA or SIPP depending on yearly tax circumstances and room, if everything was full then a GIA, and then also looking to rotate them into ISA/SIPP.

If there is a better way of doing this I would welcome to be corrected, also this does of course assume a rosy future where the annual limits are coming into play 

With a little luck this could be more relevant in the near future as I believe the UK government is working with the US to allow UK investors to buy US funds/etf's etc (a side effect of Brexit)

You can offset dividend tax with withholding tax in a GIA. You need to take account of that.

The US is not going to allow us to buy their Mutual Funds because the dividends are paid without deduction of withholding tax.

We do not need to work with the US to allow us to by their ETFs. We just need to change our rules. We could have done that without Brexit. There is lots of flexibility in the EU directive.

Adyinvestment

GeoffTF said:

Adyinvestment said:

GeoffTF said:

GeoffTF said:

That depends on your broker. AJ Bell is said to be good in this regard.

After getting a little excited and not really thinking about this when I got seriously into investing I am slowly moving dividend investments around to the below format.


*Assuming you are going to own everything anyway*

Dividend paying US investments SIPP first any left over would be ISA, but not GIA unless desperate to own them and all else was full, and then I would be looking to rotate them into the SIPP as soon as practical so as to leave the £500 UK dividend allowance for any UK shares.

Dividend paying UK investments ISA or SIPP depending on yearly tax circumstances and room, if everything was full then a GIA, and then also looking to rotate them into ISA/SIPP.

If there is a better way of doing this I would welcome to be corrected, also this does of course assume a rosy future where the annual limits are coming into play 

With a little luck this could be more relevant in the near future as I believe the UK government is working with the US to allow UK investors to buy US funds/etf's etc (a side effect of Brexit)

You can offset dividend tax with withholding tax in a GIA. You need to take account of that.

The US is not going to allow us to buy their Mutual Funds because the dividends are paid without deduction of withholding tax.

We do not need to work with the US to allow us to by their ETFs. We just need to change our rules. We could have done that without Brexit. There is lots of flexibility in the EU directive.

I am not familiar with offsetting withholding tax in a GIA, but am I correct this would effect the £500?


 I wonder if it comes to pass we can buy US ETF’S, whether we could buy Mutual Funds in a SIPP as they are currently free of withholding tax anyway.

bostonerimus

Adyinvestment said:

GeoffTF said:

Adyinvestment said:

GeoffTF said:

GeoffTF said:

That depends on your broker. AJ Bell is said to be good in this regard.

After getting a little excited and not really thinking about this when I got seriously into investing I am slowly moving dividend investments around to the below format.


*Assuming you are going to own everything anyway*

Dividend paying US investments SIPP first any left over would be ISA, but not GIA unless desperate to own them and all else was full, and then I would be looking to rotate them into the SIPP as soon as practical so as to leave the £500 UK dividend allowance for any UK shares.

Dividend paying UK investments ISA or SIPP depending on yearly tax circumstances and room, if everything was full then a GIA, and then also looking to rotate them into ISA/SIPP.

If there is a better way of doing this I would welcome to be corrected, also this does of course assume a rosy future where the annual limits are coming into play 

With a little luck this could be more relevant in the near future as I believe the UK government is working with the US to allow UK investors to buy US funds/etf's etc (a side effect of Brexit)

You can offset dividend tax with withholding tax in a GIA. You need to take account of that.

The US is not going to allow us to buy their Mutual Funds because the dividends are paid without deduction of withholding tax.

We do not need to work with the US to allow us to by their ETFs. We just need to change our rules. We could have done that without Brexit. There is lots of flexibility in the EU directive.

I am not familiar with offsetting withholding tax in a GIA, but am I correct this would effect the £500?


 I wonder if it comes to pass we can buy US ETF’S, whether we could buy Mutual Funds in a SIPP as they are currently free of withholding tax anyway.

Don't hold your breath. Why do people want to complicate their lives?

pecunianonolet

Yes, UK citizen and based here (for now), but also hold another EU passport. I could get another passport of another country but 2 passports and nationalities is enough lol (complicated enough in some regards but many other benefits in other regards). By reading all of this, and thank you for all the contributions, I guess I file this topic and stay with some easier manaagable opportunities. Maybe I invest in Scotch, 40% guaranteed

bostonerimus

pecunianonolet said:

Yes, UK citizen and based here (for now), but also hold another EU passport. I could get another passport of another country but 2 passports and nationalities is enough lol (complicated enough in some regards but many other benefits in other regards). By reading all of this, and thank you for all the contributions, I guess I file this topic and stay with some easier manaagable opportunities. Maybe I invest in Scotch, 40% guaranteed

Very wise. If possible it is usually better to invest locally as it avoids cross-border tax and financial regulations.