US Share Brokerage Account - advice please

stevedresden · 18 October 2018 at 1:52PM

I was a UK employee of a global firm based in the US. For several years they would award shares to employees instead of a cash bonus. As a result I now have around $14,000 of shares in this company (it's actually now 5 different sets of shares due to mergers and sell-offs of the original company).

These shares all sit in a US brokerage account with Bank Of America, and as it has always been nothing but a pain, I just left them.

As I'm now no longer an employee of the company, the brokers have started charging a $65 annual fee to run my account. I hadn't realised but the ex-employer had always paid the account fees for its employees

I have no real intention of ever trading shares, I had just planned to leave them there for a rainy day/retirement, but now it looks like the annual account fee is going to keep eating into any dividends ($65 is roughly 30% of what it made in dividends last year)

So my options are to liquidate the account or move the shares to a UK broker.

I'm assuming that UK brokers will also charge an account fee though, and as I have no intention to trade I'm wondering if that's worth it

If I cash in the shares, what should I do with the cash (roughly £10k). I'm 48.

bostonerimus · 18 October 2018 at 3:18PM

Where did you work when you received these shares and has income tax been paid on them?

stevedresden · 18 October 2018 at 3:27PM

I worked in the UK and yes the tax is all in order, albeit a fairly tortuous process. The US broker basically withheld the maximum US tax due (in the form of shares) and then the UK payroll would pay the difference between the tax that the US withheld and your actual tax code.

EdSwippet · 18 October 2018 at 3:37PM

Not all UK brokers charge just to hold shares. Hargreaves Lansdown, for example. So you could hold US shares there more cheaply than at BOA.

You have a £11.7k UK capital gains allowance, so if you haven't already used it you should be able to cash in this entire account with no CGT issues. That will be simpler than trying to move these holdings to a UK broker intact, even if you decide to rebuy the same stuff in a UK broker (ideally, inside an ISA).

As for holding these shares ... every day you choose not to sell is equivalent to choosing to buy. If you had £10k in spare cash today, would you buy these shares, or something else? If you want something more diversified, a Vanguard Lifestrategy fund would work well (again, ideally inside an ISA). Or pay off some debt, particularly high interest stuff like credit cards. Or increase your pension contributions, particularly if this will help you avoid some higher rate income tax. Or get a new kitchen. Or take a world cruise.

stevedresden · 18 October 2018 at 3:44PM

EdSwippet wrote: »

Not all UK brokers charge just to hold shares. Hargreaves Lansdown, for example. So you could hold US shares there more cheaply than at BOA.

You have a £11.7k UK capital gains allowance, so if you haven't already used it you should be able to cash in this entire account with no CGT issues. That will be simpler than trying to move these holdings to a UK broker intact, even if you decide to rebuy the same stuff in a UK broker (ideally, inside an ISA).

As for holding these shares ... every day you choose not to sell is equivalent to choosing to buy. If you had £10k in spare cash today, would you buy these shares, or something else? If you want something more diversified, a Vanguard Lifestrategy fund would work well (again, ideally inside an ISA). Or pay off some debt, particularly high interest stuff like credit cards. Or increase your pension contributions, particularly if this will help you avoid some higher rate income tax. Or get a new kitchen. Or take a world cruise.

Thanks - that all makes sense.

The other thing I need to consider is the timing. With the instability of the pound against the dollar, the UK value is fluctuating quite a lot (with every Brexit-based announcement!)

And they lost about $1000 overall last week when the market dipped. I think once they recover a bit I'll withdraw the lot (noting the CGT limit)

Thrugelmir · 18 October 2018 at 3:55PM

stevedresden wrote: »

The other thing I need to consider is the timing. With the instability of the pound against the dollar, the UK value is fluctuating quite a lot (with every Brexit-based announcement!)

In historical terms the exchange rate is favourable to buying sterling. Focus is more on the US China trade war , Trump's rantings, US economic news and what the Fed does next. There's no real direct correlation between Brexit and the US $. The £ - € rate trading in a relatively narrow band for some time now. If the BOE were to lift UK base by 1.5%. There would be a considerable strengthening of the £. Though unlikely as the economy might buckle given the high levels of indebtedness.

EdSwippet · 18 October 2018 at 4:21PM

stevedresden wrote: »

And they lost about $1000 overall last week when the market dipped. I think once they recover a bit I'll withdraw the lot (noting the CGT limit)

Predicting stock markets is virtually impossible. Predicting currency markets is even more so.

As for CGT, even if your stocks rise back to $15k you shouldn't have a problem with it. That comes to just under £11.5k so below your UK CGT allowance in total, and even then only a part of your £11.5k here is gain. The rest is what you paid for these stocks -- in practice this would be what they were worth when you received them and paid tax on that equivalent amount. If you don't have good records for any reason, it can be handy to sell holdings like this before they can possibly produce a taxable capital gain.

stevedresden · 12 November 2018 at 10:15AM

Thanks to all for the advice on this one last month.

I had pretty much decided to cash them in when the share price of one of the companies dropped quite a lot (from about $80 to $60), so I figured I'd now sit tight until it returned back to what it was.

However, I've now had an email to say that the company in question has "authorised a $2 Billion incremental share repurchase scheme"

I've read up on what that means to the markets and why companies do it, but I still can't quite figure out what it means to me as a shareholder?

Any advice welcome as always
:beer:

US Share Brokerage Account - advice please

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