How to buy U.S. stocks from the UK

1404

Hi all,

I have a stocks & shares ISA with iWeb.  I would preferably like to also use it to buy a few US stocks because any gains would be tax free as it's in my ISA (I think I'm right about US stocks in a UK ISA being tax free?)

However, iWeb seem to be directing me first towards filling in a "W-8BEN" form.  NYSE may also want me to fill in another form, iWeb say.

Questions:

1)  Is filling out these forms the only way of investing in US stocks?  As I said, I would like to use the ISA for tax avoidance should I make some money.

2)  Does filling out the W-8BEN form affect my ISA in any way?  Does it alter my tax status?  Is there anything detrimental about filling in the W-8BEN form and then investing in US stocks?

3)  What other options are there to invest in US stocks?


Thanks!

lisyloo

3) If you mean you generally want to get into the UK stock market rather than particular companies then you could purchase via a fund available in the UK.
For example Fidelity, Avellamy & Vanguard offer US funds.

1404

lisyloo said:

3) If you mean you generally want to get into the UK stock market rather than particular companies then you could purchase via a fund available in the UK.
For example Fidelity, Avellamy & Vanguard offer US funds.

I'm after a few specific companies in the US.  Small AI companies.  The funds are fine if you want the bigger players (which I do, but not at these prices!)

So I want to be able to buy individual US companies directly. Preferably within my ISA tax shelter.  And without losing any of my ISA tax-wrapper or having to go through any red-tape or hassle.

wmb194

1404 said:

Hi all,

I have a stocks & shares ISA with iWeb.  I would preferably like to also use it to buy a few US stocks because any gains would be tax free as it's in my ISA (I think I'm right about US stocks in a UK ISA being tax free?)

However, iWeb seem to be directing me first towards filling in a "W-8BEN" form.  NYSE may also want me to fill in another form, iWeb say.

Questions:

1)  Is filling out these forms the only way of investing in US stocks?  As I said, I would like to use the ISA for tax avoidance should I make some money.

2)  Does filling out the W-8BEN form affect my ISA in any way?  Does it alter my tax status?  Is there anything detrimental about filling in the W-8BEN form and then investing in US stocks?

3)  What other options are there to invest in US stocks?


Thanks!

Most brokers these days require you to fill in that form before they let you buy US listed shares so yes, fill it in. 

It's no big deal, you're just saying you live in the UK and so the dividend withholding tax on dividends from from US companies will be 15% as per the UK/US double taxation agreement and not the standard US 30%. The US will only pay dividends without withholding tax if you own the security in a pension e.g., SIPP.

I wouldn't use iWeb if I could help it though: isn't its FX fee 1.5%? For comparison, Trading212's is 0.15%.

Hoenir

The W-8BEN form is a US legal requirement for foreign individuals or entities that are not US citizens or resident there for tax purposes but are earning income from the US. The form primarily is for the benefit of the US tax collection agency, the Internal Revenue Service (IRS). 

eskbanker

1404 said:
I'm after a few specific companies in the US.  Small AI companies.  The funds are fine if you want the bigger players (which I do, but not at these prices!)

So I want to be able to buy individual US companies directly. Preferably within my ISA tax shelter.  And without losing any of my ISA tax-wrapper or having to go through any red-tape or hassle.

How small, i.e. have you established that IWeb supports dealing in the companies you have in mind?

https://www.markets.iweb-sharedealing.co.uk/share-centre/

GeoffTF

iWeb does not guarantee to collect the 15% withholding tax, so you could end up paying 30% anyway. As has already been stated, iWeb charges a whopping 1.5% foreign exchange commission. Interactive Brokers (not to be confused with Interactive Investor) is a possible alternative, but is not suitable for a beginner.

Bostonerimus1

Be aware that unlike UK pension wrappers the IRS does not recognize the tax free nature of UK ISAs. I don't fully understand how the OP is buying the US shares and this might not be an issue, but if these are US trades being sent to the UK they should make sure they understand the dividend withholding rules of the IRS and also the rates within the US-UK tax treaty. My advice would be to buy a UK based S&P500 fund and don't mess with cross border taxation.

wmb194

Bostonerimus1 said:

Be aware that unlike UK pension wrappers the IRS does not recognize the tax free nature of UK ISAs. I don't fully understand how the OP is buying the US shares and this might not be an issue, but if these are US trades being sent to the UK they should make sure they understand the dividend withholding rules of the IRS and also the rates within the US-UK tax treaty. My advice would be to buy a UK based S&P500 fund and don't mess with cross border taxation.

It shouldn’t be an issue, these days buying US shares and dealing with the withholding tax is an everyday occurrence for brokers and I’ve owned US shares via iWeb and not had any problems.

1404

eskbanker said:

1404 said:
I'm after a few specific companies in the US.  Small AI companies.  The funds are fine if you want the bigger players (which I do, but not at these prices!)

So I want to be able to buy individual US companies directly. Preferably within my ISA tax shelter.  And without losing any of my ISA tax-wrapper or having to go through any red-tape or hassle.

How small, i.e. have you established that IWeb supports dealing in the companies you have in mind?

https://www.markets.iweb-sharedealing.co.uk/share-centre/

Specifically, Soundhound AI is one I'd like a small stake in.  iWeb appear to list it, but when I attempt to buy it I am directed to the W-8BEN form.

1404

Bostonerimus1 said:

Be aware that unlike UK pension wrappers the IRS does not recognize the tax free nature of UK ISAs. I don't fully understand how the OP is buying the US shares and this might not be an issue, but if these are US trades being sent to the UK they should make sure they understand the dividend withholding rules of the IRS and also the rates within the US-UK tax treaty. My advice would be to buy a UK based S&P500 fund and don't mess with cross border taxation.

Yes, I would rather have a UK fund.  As I said above though, the funds contain the big players which seem overvalued at the moment.