GBP and USD cash interests on brokerage account - onshore or foreign in tax return?

megatower

You would need to consider where the legal entity was based. eg whilst Interactive Brokers are US owned I believe that if you open an account with them from the UK it will be with "Interactive Brokers (U.K.) Limited" which is registered in the UK.

Thanks - you're not wrong and it's the same for mine too. 

masonic

It's best not to assume anything where there is uncertainty. There is a regulatory requirement to have a UK entity. That does not necessarily mean that it doesn't use services from other group companies. It is a question they should be used to answering. - Referring to the interest on cash question.

itwasntme001

For interactive investor, I found out they keep the USD cash on investor's behalf in a USD currency account with a British bank.  So I guess the interest would just fall under UK interest with the USD converted into GBP.  At least I hope so as thats how I have been doing it for years.

masonic

itwasntme001 said:

For interactive investor, I found out they keep the USD cash on investor's behalf in a USD currency account with a British bank.  So I guess the interest would just fall under UK interest with the USD converted into GBP.  At least I hope so as thats how I have been doing it for years.

Yes, with ii this is now clear following their confirmation.

randomBean

A bit off topic, but is it worth investing in USD even having to pay CGT? Or is it better to invest USD asset inside an ISA and let the FX eat some profit?

sausage_time

randomBean said:

A bit off topic, but is it worth investing in USD even having to pay CGT? Or is it better to invest USD asset inside an ISA and let the FX eat some profit?

Also off topic, I have been very happy with the Trading 212 S&S ISA.  I have been doing "bed and ISA" on some of my Schwab held US listed shares.   The T212 FX rate is 0.15%.

poseidon1

randomBean said:

A bit off topic, but is it worth investing in USD even having to pay CGT? Or is it better to invest USD asset inside an ISA and let the FX eat some profit?

I would certainly  think the ISA makes sense for thoses with decent sized holdings  looking to hold for longterm 5 to 10 years growth, even with  interactive investors fx charges on purchase and sale.  

The measly £3000 annual exemption ( saving a maximum of £720  tax) is only of real value for investors with relatively small portfolios, and with dividend taxes on the increase ( especially for 40% tax payers), sheltering your American dividends from additional UK tax ( over and above 15% withholding) must be beneficial over the longer term via ISA.

There is of course the considerable advantage of avoiding the need to maintain any annual record of your American investment dealings for tax compliance purposes if transacted via ISA. That advantage cannot be overstated, given the number of people who regularly appear on this forum having lost sight of their investment cost figures.

megatower

randomBean said:

A bit off topic, but is it worth investing in USD even having to pay CGT? Or is it better to invest USD asset inside an ISA and let the FX eat some profit?

I'd think it really depends on individual situations, e.g., is the USD an investment itself or just something between different assets, and whether you think the USD or GBP is going to appreciate, how much is the FX rate at your brokers. It would certainly be best to do that in a ISA/SIPP, but not always possible (e.g. I already max-ed out the ISA allowance).