Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@. Skimlinks & other affiliated links are turned on

Search
  • FIRST POST
    • Mark2016
    • By Mark2016 8th Mar 18, 9:37 AM
    • 45Posts
    • 4Thanks
    Mark2016
    US Stocks
    • #1
    • 8th Mar 18, 9:37 AM
    US Stocks 8th Mar 18 at 9:37 AM
    Hi everyone

    I am considering investing in US Stocks and have a few questions. Currently I have an ISA with Hargreaves Lansdowne, but think that their fee for buying/.selling US stocks is rather high. I am looking for a broker with much lower costs. One that seems quite good is Degiro. Anyone any experience with them? Secondly, if I buy US stocks outside of an ISA but with a WBen form completed, am I still liable to pay tax?

    Thanks everyone
Page 1
    • AnotherJoe
    • By AnotherJoe 8th Mar 18, 10:10 AM
    • 9,436 Posts
    • 10,442 Thanks
    AnotherJoe
    • #2
    • 8th Mar 18, 10:10 AM
    • #2
    • 8th Mar 18, 10:10 AM
    Second point first. You are due to pay taxes, for example, CGT is applicable, there is still tax on dividends, etc. W8 isn't a magic wand to avoid taxes

    First point second, I think people tend to wrongly focus on fees for buying and selling and ignore the significant costs.
    Unless you are trading tiny amounts of money and frequently, the share dealing costs should be irrelevant. If they are significant you shouldn't be trading shares in the first place. Only exception would be, you intend to daytrade in which case you need an account that holds money in the same currency otherwise currency costs will kill you.
    You cant do this in an ISA, if you buy or sell foreign shares in an ISA the loss through currency conversion will FAR outweigh whether HL charge 12.50 as opposed to Cheapo Brokers charging 10 or whatever. As in orders of magnitude more.
    I work on the basis you can expect to lose 5% if you convert money. So if you convert 1000 to $ you probably end up with 950 worth of $. Now you buy shares in Acme, and lets say they do nothing you get bored and sell them to buy Beta Corp also in $. Well lets forget the trading costs, that $950 now becomes 902 (because it gets converted back to in your ISA. Then its converted again to $ to buy Beta corp and now its 857. So you lost nearly 100 on currency conversion yet you are focusing on the difference between a trading cost of 10 or 20. And if itw as 10,000 not 1000 you lost nearly 1,000 and again are focusing on 10 or 20.

    The two ways to avoid this are;
    Hold shares in the US and trade US shares in that account. Then you only pay currency conversion twice, once on the way into the account once on the way out.
    Use an account (I have iii , was TD) which provides a foreign currency account* and manages trading within that. So if i sell Apple for $10000 I have $10000 to buy Tesla with.
    I dont know how difficult it is to get a US account in the US these days, i suspect very difficult, mine is historic, i did have two and the other was closed as a matter of policy and transferred to their UK branch (which became TD which became iii). I am slowly selling down the US account.

    * (EDIT, HL and other brokers may also provide such a function. iii happens to be the one i know about)
    Last edited by AnotherJoe; 08-03-2018 at 10:32 AM.
    • Voyager2002
    • By Voyager2002 8th Mar 18, 11:18 AM
    • 12,083 Posts
    • 8,217 Thanks
    Voyager2002
    • #3
    • 8th Mar 18, 11:18 AM
    • #3
    • 8th Mar 18, 11:18 AM
    Hold shares in the US and trade US shares in that account. Then you only pay currency conversion twice, once on the way into the account once on the way out.
    Use an account (I have iii , was TD) which provides a foreign currency account* and manages trading within that. So if i sell Apple for $10000 I have $10000 to buy Tesla with.
    I dont know how difficult it is to get a US account in the US these days, i suspect very difficult, mine is historic, i did have two and the other was closed as a matter of policy and transferred to their UK branch (which became TD which became iii). I am slowly selling down the US account.

    * (EDIT, HL and other brokers may also provide such a function. iii happens to be the one i know about)
    Originally posted by AnotherJoe
    I also do this in an account that was opened as Internaxx; then became TD; and is now II.

    About nine years ago I tried very hard to open an account with a US broker and found it impossible to do so, despite having a current account with a major bank in the USA and receiving my dollar salary there.
    • EdSwippet
    • By EdSwippet 8th Mar 18, 2:30 PM
    • 706 Posts
    • 661 Thanks
    EdSwippet
    • #4
    • 8th Mar 18, 2:30 PM
    • #4
    • 8th Mar 18, 2:30 PM
    Secondly, if I buy US stocks outside of an ISA but with a WBen form completed, am I still liable to pay tax?
    Originally posted by Mark2016
    The US levies a tax of 30% on dividends paid by US stocks to foreigners. For UK investors, the US/UK tax treaty reduces this to 15% for non-pensions and 0% for pensions, claimed on a W-8BEN form sent to the broker.

    So for you, the tax works out like this:
    • Outside an ISA and SIPP. You can claim credit for up to this 15% against your UK tax, but only to the extent that your UK tax matches or exceeds the amount you have to pay to the US. So if your dividends all fall into the 0% UK dividend tax-free allowance then this 15% paid to the US is simply a deadweight tax loss.
    • In an ISA. The 15% US tax on dividends is a deadweight loss. You cannot reduce US tax on dividends to below 15% in an ISA , and you have no UK tax against which to claim a credit for the 15% paid to the US.
    • In a SIPP. You can reduce the US tax on dividends to 0%, but only if the broker or platform supports this. Some do, including HL I believe. Check their details.

    When you sell there is no US capital gains tax to consider anywhere, but you would of course still be liable to any UK capital gains tax if the gains are above your annual UK capital gains tax allowance and fall outside an ISA and a SIPP. Assuming you are a UK national you are safe from predatory US estate taxes up to $11mm of holdings.
    • Mark2016
    • By Mark2016 8th Mar 18, 2:48 PM
    • 45 Posts
    • 4 Thanks
    Mark2016
    • #5
    • 8th Mar 18, 2:48 PM
    • #5
    • 8th Mar 18, 2:48 PM
    Thanks everyone. Appreciate your input
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

55Posts Today

3,034Users online

Martin's Twitter
  • It's the start of mini MSE's half term. In order to be the best daddy possible, Im stopping work and going off line? https://t.co/kwjvtd75YU

  • RT @shellsince1982: @MartinSLewis thanx to your email I have just saved myself £222 by taking a SIM only deal for £7.50 a month and keeping?

  • Today's Friday twitter poll: An important question, building on yesterday's important discussions: Which is the best bit of the pizza...

  • Follow Martin