Tax implications of trading from the UK on US Stocks...?

Hello All,


I will be trading from the UK, I am a British passport holder trading stocks like Netflix, GoPro etc. which are US based stocks.

I've been doing some research on the tax implications and the form w-8ben. I can't seem to determine whether the 30% tax is payable to the US government on my profits or if I would be exempt.

I'm also assuming that I would pay the normal income tax here in the UK. Is this correct?

Any comments or advice are welcome.

Thanks,

Vik

I used to trade UK stocks without leverage through a regular stock broker in one of their investment ISAs - so tax free. Never traded US stocks but a quick google suggests it legit.

vchohan1 said:

. . .I've been doing some research on the tax implications and the form w-8ben. I can't seem to determine whether the 30% tax is payable to the US government on my profits or if I would be exempt.

I'm also assuming that I would pay the normal income tax here in the UK. Is this correct?

Click to expand...

Hi Vik,
Tax rules and regulations change, so I can't say for sure what the situation is today for a U.K. citizen trading U.S. equities. However, when I day traded U.S. stocks back in 2008 I looked into this and, back then, the w-8ben form exempted one from paying any U.S. taxes. All tax liabilities were solely to HMRC. I was not liable for Income Tax, but I had to pay Capital Gains Tax at the prevailing rate. From memory, I think this could be mitigated by opening a joint account with my wife, thereby enabling me to double up on the allowances. Take a look at this post.

If you want to get an accurate picture of how things are today, your best bet is to get it from the horses mouth and contact HMRC. Failing that, an active U.S. equities trader such as Mr. Charts may be able to offer additional insight.
Tim.

timsk said:

Hi Vik,
Tax rules and regulations change, so I can't say for sure what the situation is today for a U.K. citizen trading U.S. equities. However, when I day traded U.S. stocks back in 2008 I looked into this and, back then, the w-8ben form exempted one from paying any U.S. taxes. All tax liabilities were solely to HMRC. I was not liable for Income Tax, but I had to pay Capital Gains Tax at the prevailing rate. From memory, I think this could be mitigated by opening a joint account with my wife, thereby enabling me to double up on the allowances. Take a look at this post.

If you want to get an accurate picture of how things are today, your best bet is to get it from the horses mouth and contact HMRC. Failing that, an active U.S. equities trader such as Mr. Charts may be able to offer additional insight.
Tim.

Click to expand...

Thanks Tim, I had a look at the link and I think you're right, who better than to hear i from the horses mouth.

Hopefully Mr. Charts or someone else can also add to your comments.

vchohan1 said:

Thanks Tim, I had a look at the link and I think you're right, who better than to hear i from the horses mouth.

Hopefully Mr. Charts or someone else can also add to your comments.

Click to expand...

30% tax is withheld its not payable by you to the IRS, it can be withheld by your broker who then accounts for the withholding tax to the IRS
the person you need to speak to is your broker..do they need you need to fill out a W-8BEN

if you buy/sell shares in a UK or a foreign stock typically you are NOT the legal owner of the shares therefore you shouldn't need to be concerned with the W-8. Again its the broker who will sometimes give you the choice if you hold a nominee account (you are not the legal owner). This will be part of the T&Cs with the broker.
almost all on line transactions are via a nominee these days, so you never receive a share certificate (because you don't own the shares) and any dividend is not paid directly to you because you dont own the shares..its paid to the broker who then passes this on.
Hopefully this is clearer

so in a nutshell speak to your broker, will they withhold the 30%

if you are resident in UK, and your broker is UK I would doubt very much if you required a W8
if on the other hand you are UK resident and your broker is US (Interactive Brokers for example) you will likely need to sign this disclosure when you set up the account. so again, like I say, its your broker you need to be asking..not another UK or US resident person