Stamp duty on stocks?

mr_fishbulb

cloud_dog wrote: »

Yes, as I alluded to in my original response (post 4).;)

Oh yeah

meester

Hotgirl69 wrote: »

2% on conversion, thats stamp duty x4... Its common sense this is incorrect.

Common sense?

Why not do a bit of research instead?

Stamp duty is a TAX. It is purely government revenue. It does not need to be any more than ZERO. It is totally up to the government

Forex costs represent the actual costs of exchanging money. It is no more correlated to the cost of stamp duty than it is to the price of a loaf of bread.

Here's are some typical costs:

http://www.tdwaterhouse.co.uk/international/international_fx.cfm

The FX Rate for all currency conversions is based on the mid-market wholesale exchange rate supplied by Royal Bank of Scotland, to which TD Waterhouse apply a spread based on up to +/- 1.5%. This is applied at the time of contracting. Because Exchange rates fluctuate the exchange rate used will depend on market conditions.
Trades <£50k GBP/Equivalent150bps (1.5%)

GBP/equivalentSpread£50k-£100k100bps (1%)£100k-£250k50bps (0.5%)>£250k25bps (0.25%)


So when you buy USD, you pay 1.5%.

And when you sell, you pay 1.5% as well.

3%.

If you've got £50k to trade at a time, then it goes down to 2% overall (1% each way). Dwarfing the costs of stamp duty.

meester

cloud_dog wrote: »

Also, if you complete the W-8BEN you wont iuncur any additional income taxation from the US:

"What is the W-8BEN?
By completing this form, UK investors can claim exemption from paying US tax on dividends and interest from shares traded in the US, as such income will already fall under UK income tax rules."

cloud_dog

The tax is withheld at source. You'd be better off reading IRS documents for the accurate story

The rate is 15%:
http://www.irs.gov/pub/irs-pdf/p515.pdf Page 39

The rate otherwise is 30%

See also
http://www.irs.gov/pub/irs-pdf/iw8ben.pdf

It's based on the tax treaty between the US and UK.

Also confirmed on UK tax site:

http://www.hmrc.gov.uk/manuals/dtmanual/DT19867A.htm

Hotgirl69

meester wrote: »

Common sense?

Why not do a bit of research instead?

Stamp duty is a TAX. It is purely government revenue. It does not need to be any more than ZERO. It is totally up to the government

Forex costs represent the actual costs of exchanging money. It is no more correlated to the cost of stamp duty than it is to the price of a loaf of bread.

Here's are some typical costs:

http://www.tdwaterhouse.co.uk/international/international_fx.cfm

The FX Rate for all currency conversions is based on the mid-market wholesale exchange rate supplied by Royal Bank of Scotland, to which TD Waterhouse apply a spread based on up to +/- 1.5%. This is applied at the time of contracting. Because Exchange rates fluctuate the exchange rate used will depend on market conditions.
Trades <£50k GBP/Equivalent150bps (1.5%)

GBP/equivalentSpread£50k-£100k100bps (1%)£100k-£250k50bps (0.5%)>£250k25bps (0.25%)


So when you buy USD, you pay 1.5%.

And when you sell, you pay 1.5% as well.

3%.

If you've got £50k to trade at a time, then it goes down to 2% overall (1% each way). Dwarfing the costs of stamp duty.

I apologize, this is even more confusing...

you say; "does not need to be any more than ZERO"
I thought stamp duty is a solid 0.5% ?

"then it goes down to 2% overall (1% each way). Dwarfing the costs of stamp duty."
Hows 2% dwarfing the cost of stamp duty, if stamp duty is 0.5%?

jamesd

Hotgirl69, 2% is four times 0.5% so the foreign exchange costs are many times higher than stamp duty.

debbie42

You could always open a dollar account if you planned on doing a lot of trading in that currency.

meester

debbie42 wrote: »

You could always open a dollar account if you planned on doing a lot of trading in that currency.

TD Waterhouse have that facility. The problem is getting your money into and out of dollars in the first place. It helps mainly if you are trading regularly, in which case you only pay currency costs when you put the money in and when you take it out, not on each transaction.

There could be other ways to reduce currency costs, such as if you could fund a dollar trading account using a Nationwide debit card. If you do this the purchase cost would be limited to the wholesale bid/spread difference (I am not exactly sure how much this is but I guess about 0.5%), but you still pay on withdrawal.

The only way to get FOREX costs as low as UK stamp duty would appear to be if you have a quarter of a million to invest in which case the charge is down to 0.25% each way. This implies that you have liquid assets of many millions of pounds....