Withholding tax 15%?

Hi

So we have to pay 15% on all U.S dividends?

Thatā€™s on top of the 0.45% per trade?

The US government taxes dividends at 30% withholding tax, as the UK has an agreement with them thatā€™s reduced to 15% for UK residents.

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And its taken off automatically so you wonā€™t see it.

You see it in the payout, breakdown e-mailā€¦Was just a little surprised by it is all.

Think iā€™ll stick to mostly U.K. stocks.

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With UK stocks you have to pay stamp duty so it kind of evens out

Is that stamp duty on dividends or on stock purchase?

Purchases iirc.

Dividends should be protected if you have the ISA.

Ahh yes i see now.

And thereā€™s no stamp duty on London Stock Exchangeā€™s AIM and High Growth Segment.

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Was just typing that. :stuck_out_tongue:

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does anyone know if the 15% tax on dividend is applyed in the ISA as well?

Yes.

well that changes my calculations completly on dividendsā€¦

ISAs do not have any special status for foreign tax . ā€¦ The standard WHT on US dividends is 30%. This is reduced to 15% under the UK - US DTA, which is the rate that will apply whether you hold US stocks outside or inside an ISA .

Worth noting that SIPPs are exempt from withholding tax if itā€™s applied by the broker. Also worth noting that freetrade currently donā€™t do this so the 15% is still taken. They did say theyā€™re looking to solve this though

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To avoid paying the withholding tax go for American growth stocks instead.

Capital appreciation over dividends!!!

Moreover, If you stick mainly with UK stocks your portfolio may well lack the diversification which needed.

From another SIPP providers website -
You donā€™t need to complete either form if you hold your investments in an AJ Bell Youinvest SIPP. This is because when in a SIPP, US investments are automatically exempt from withholding tax and Canadian investments automatically benefit from a reduced withholding tax.

looks like it is up to the provider how they treat the Foreign dividends for ISA /SIPP accounts. Is it not possible for ISA holders to reclaim the rest 15%?

No, just because something can be done for a SIPP does not mean it can be done for an ISA. ISAs are a UK tax shelter that other countries do not recognise, but pension funds are often recognised in tax treaties, they have a different legal structure, and the US-UK tax treaty contains provisions that specifically relate to pension funds. Hereā€™s a good discussion of the issues:

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I appreciate the advice but i much prefer dividend investingā€¦I do look at capital appreciation also thoughā€¦I donā€™t see it as having to choose one over the otherā€¦You can have both.

I also find diversifying quite over rated to be honest. I diversify plenty in sector but not in the number of holdings.

I have a couple of good dividend U.S. stocks but keep them to a minimum.

Is there then a UK tax liability between the 15% and tthe UK rate?

No .

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