[Feature Request 🔧] SIPP: Remove Withholding Tax on Foreign Dividends

If we hold US stocks in FT SIPP we are still paying 15% withholding tax.

Based on my amateur research -

  1. We don’t need to be paying this tax.
  2. Freetrade SIPP structure is set up so we have to pay the tax, other SIPP providers AJ & Hargreaves are set up in a way that no tax is taken.

The Request - Can the SIPP set up be adjusted so we are not paying the US gov tax that we don’t in fact have to. Personally, I really don’t want to pay tax on dividends on Apple etc inside a SIPP that I’ll be holding for 30+ years.

Research
SIPPs are different. Under some tax treaties, there are special clauses for WHT on dividends paid into a pension scheme. One very important case is the UK-US DTA. Under this, dividend payments by US companies into a UK pension scheme should be taxed at a zero rate (see the [HMRC manual (DT19867A - Double Taxation Relief Manual: Guidance by country: United States of America: Dividends: from 1st May 2003 - HMRC internal manual - GOV.UK) and the treaty text [PDF]).

“SIPPs qualify for a zero rate of withholding tax from certain countries including the US. However, not all brokers structure their SIPPs to enjoy this.”

UK shareholders in US companies will receive their dividends net of 15 per cent tax if they hold their stock within an Isa or outside a tax wrapper. If their holding is within a Sipp, then they are treated like a conventional pension fund and receive their dividends gross.

Sounds like a no brainer so voted but best you vote for your own idea :+1: :stuck_out_tongue:

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Yeah freetrade confirmed a bit ago they don’t currently support this… unfortunately.

It adds up especially on a SIPP

Definitely needed

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What work needs to be done to achieve this? Is this a wholesale reworking or a tweek, does anyone know?

Definitely super-important. I will not move any larger amount of money in my SIPP over to Freetrade unless this is sorted (I’m surprised it’s not yet!)

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With the stated aim to increase the AUM this feels like a very important feature to focus on.

Higher AUM = Higher valuation
Higher valuation = Cheaper capital
Cheap capital = More engineers to make more stuff!

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Fully agree!

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Just learned about this issue now, and see it as a very important issue of fiduciary duty to investors. Very important to fix.

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It is terrifying how much money is lost to a long term pension from this tax being withheld over time and adding in the compounding effect being lost :frowning: Seems a real no brainer and should be a high priority TBH.

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