I won’t forget you little people though with my new found riches
Hahaha that gif
Can someone explain what that ‘withholding tax’ is about and when it applies?
In the simplest terms it’s a fancy way of saying tax taken at the source before you are paid.
There’s no requirement to withhold tax for dividends by UK companies, so it doesn’t apply here.
However if you invested in foreign shares then some taxes may be held.
I may be wrong but the US dividends have 30% withholding tax, which could be reduced down to 10% tax treaties if you fill some for that you are a UK resident.
Don’t take my word for it, but I think something like that exists
I think it’s reduced to 15% for US shares. It’s a W-8BEN form. Despite its scary name is actually very short and quick to fill in (I did one for HL). From what I remember it’s just a few personal details and confirming you are not a US resident.
The tax is taken at source so the payment you receive is the net dividend (ie 85% of the original) which means you don’t have to worry about paying the tax yourself at a later date. It does kinda suck to not receive as much as a US resident, but it’s a price to pay for access to the many amazing US dividend stocks. At least with US stocks you don’t pay stamp duty, so that’s one compensation.
I assume the form is something that will be available on Freetrade as soon as US shares launch?
I knew I did not make it up, thanks for correcting the figures!