How to buy U.S. stocks from the UK

1404

wmb194 said:

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.

Did you hold them in an ISA?  If so, what were the tax implications?  Any hassle involved?

wmb194

1404 said:

wmb194 said:

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.

Did you hold them in an ISA?  If so, what were the tax implications?  Any hassle involved?

Isas are treated the same as a GIA for US dividend w/h tax and otherwise no tax implications. No hassle, just have to fill in the form.

Bostonerimus1

wmb194 said:

1404 said:

wmb194 said:

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.

Did you hold them in an ISA?  If so, what were the tax implications?  Any hassle involved?

Isas are treated the same as a GIA for US dividend w/h tax and otherwise no tax implications. No hassle, just have to fill in the form.

So what happens with the dividends? US dividends owned paid to a non-US citizen, resident in the UK can be taxed by both the US and the UK. I assume the ISA wrapper will protect from UK tax, but does iWeb pay 15% tax on the dividends to the IRS? What happens with capital gains? Why buy US shares and also lose the tax free nature of your ISA? I imagine there will be fees involved as well.

Hoenir

Bostonerimus1 said:

wmb194 said:

1404 said:

wmb194 said:

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.

Did you hold them in an ISA?  If so, what were the tax implications?  Any hassle involved?

Isas are treated the same as a GIA for US dividend w/h tax and otherwise no tax implications. No hassle, just have to fill in the form.

So what happens with the dividends? US dividends owned paid to a non-US citizen, resident in the UK can be taxed by both the US and the UK. I assume the ISA wrapper will protect from UK tax, but does iWeb pay 15% tax on the dividends to the IRS? What happens with capital gains? Why buy US shares and also lose the tax free nature of your ISA? I imagine there will be fees involved as well.

As US shares cannot be directly held outside the USA. There'll be an intermediary nominee based in the US. UK platforms will receive the dividends after deduction of the relevant tax. 

Bostonerimus1

Hoenir said:

Bostonerimus1 said:

wmb194 said:

1404 said:

wmb194 said:

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.

Did you hold them in an ISA?  If so, what were the tax implications?  Any hassle involved?

Isas are treated the same as a GIA for US dividend w/h tax and otherwise no tax implications. No hassle, just have to fill in the form.

So what happens with the dividends? US dividends owned paid to a non-US citizen, resident in the UK can be taxed by both the US and the UK. I assume the ISA wrapper will protect from UK tax, but does iWeb pay 15% tax on the dividends to the IRS? What happens with capital gains? Why buy US shares and also lose the tax free nature of your ISA? I imagine there will be fees involved as well.

As US shares cannot be directly held outside the USA. There'll be an intermediary nominee based in the US. UK platforms will receive the dividends after deduction of the relevant tax. 

So by holding US shares you lose the tax free nature of the ISA. That does not sound like a smart move to me. Wouldn't it be better to fill up your ISA with UK investments first and then satisfy any desire for US shares in a GIA. All this sounds like a complicated way to lose money to tax and fees on the "guess" that the US shares will do better than a UK based fund that investments in US markets.

wmb194

Bostonerimus1 said:

Hoenir said:

Bostonerimus1 said:

wmb194 said:

1404 said:

wmb194 said:

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.

Did you hold them in an ISA?  If so, what were the tax implications?  Any hassle involved?

Isas are treated the same as a GIA for US dividend w/h tax and otherwise no tax implications. No hassle, just have to fill in the form.

So what happens with the dividends? US dividends owned paid to a non-US citizen, resident in the UK can be taxed by both the US and the UK. I assume the ISA wrapper will protect from UK tax, but does iWeb pay 15% tax on the dividends to the IRS? What happens with capital gains? Why buy US shares and also lose the tax free nature of your ISA? I imagine there will be fees involved as well.

As US shares cannot be directly held outside the USA. There'll be an intermediary nominee based in the US. UK platforms will receive the dividends after deduction of the relevant tax. 

So by holding US shares you lose the tax free nature of the ISA. That does not sound like a smart move to me. Wouldn't it be better to fill up your ISA with UK investments first and then satisfy any desire for US shares in a GIA. All this sounds like a complicated way to lose money to tax and fees on the "guess" that the US shares will do better than a UK based fund that investments in US markets.

Only on part of the dividend. The remainder of the dividend and any capital gains are tax free. 

Isas have never been fully tax free, so you still have to pay 0.5% stamp duty where it's due on London listed shares and the e.g.. 0.2% FTT tax due on the purchase of French listed shares with market caps of >=€1bn.

This is also true for other countries that have dividend withholding taxes e.g., France, Germany, the Netherlands and Switzerland. It's occurring all the time but when you buy your global ETF it isn't as transparent as when you own the shares directly.

Hoenir

Bostonerimus1 said:

Hoenir said:

Bostonerimus1 said:

wmb194 said:

1404 said:

wmb194 said:

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.

Did you hold them in an ISA?  If so, what were the tax implications?  Any hassle involved?

Isas are treated the same as a GIA for US dividend w/h tax and otherwise no tax implications. No hassle, just have to fill in the form.

So what happens with the dividends? US dividends owned paid to a non-US citizen, resident in the UK can be taxed by both the US and the UK. I assume the ISA wrapper will protect from UK tax, but does iWeb pay 15% tax on the dividends to the IRS? What happens with capital gains? Why buy US shares and also lose the tax free nature of your ISA? I imagine there will be fees involved as well.

As US shares cannot be directly held outside the USA. There'll be an intermediary nominee based in the US. UK platforms will receive the dividends after deduction of the relevant tax. 

So by holding US shares you lose the tax free nature of the ISA. That does not sound like a smart move to me. Wouldn't it be better to fill up your ISA with UK investments first and then satisfy any desire for US shares in a GIA. All this sounds like a complicated way to lose money to tax and fees on the "guess" that the US shares will do better than a UK based fund that investments in US markets.

UK tax legislation does not apply to other countries unsurprisingly. Generally the yields in developed markets on equities aren't as attractive as those on the LSE. S&P 500 only yields around 1.5% - 1.6% for example. Historically this down to the fact that income has been more heavily taxed. Capital Gains being far more attractive to investors. 

Noted the other day that Jeff Bezos having moved his residency to Florida. Has only got to pay a rate of 7% on the $2 billion sale of Amazon shares he disposed of. 

Bostonerimus1

wmb194 said:

Bostonerimus1 said:

Hoenir said:

Bostonerimus1 said:

wmb194 said:

1404 said:

wmb194 said:

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.

Did you hold them in an ISA?  If so, what were the tax implications?  Any hassle involved?

Isas are treated the same as a GIA for US dividend w/h tax and otherwise no tax implications. No hassle, just have to fill in the form.

So what happens with the dividends? US dividends owned paid to a non-US citizen, resident in the UK can be taxed by both the US and the UK. I assume the ISA wrapper will protect from UK tax, but does iWeb pay 15% tax on the dividends to the IRS? What happens with capital gains? Why buy US shares and also lose the tax free nature of your ISA? I imagine there will be fees involved as well.

As US shares cannot be directly held outside the USA. There'll be an intermediary nominee based in the US. UK platforms will receive the dividends after deduction of the relevant tax. 

So by holding US shares you lose the tax free nature of the ISA. That does not sound like a smart move to me. Wouldn't it be better to fill up your ISA with UK investments first and then satisfy any desire for US shares in a GIA. All this sounds like a complicated way to lose money to tax and fees on the "guess" that the US shares will do better than a UK based fund that investments in US markets.

Only on part of the dividend. The remainder of the dividend and any capital gains are tax free. 

Isas have never been fully tax free, so you still have to pay 0.5% stamp duty where it's due on London listed shares and the e.g.. 0.2% FTT tax due on the purchase of French listed shares with market caps of >=€1bn.

This is also true for other countries that have dividend withholding taxes e.g., France, Germany, the Netherlands and Switzerland. It's occurring all the time but when you buy your global ETF it isn't as transparent as when you own the shares directly.

Doh, yes funds will also be liable to foreign tax. But buying foreign shares directly isn’t something I’d do as it goes against my philosophy of avoiding individual company shares and keeping things as simple as possible. But I think the OP has a good roadmap now whatever they decide.