Selftrade dividend 15% withholding tax?

  • Posted: 23 August 2012 11:58 PM

    So I have a W8-BEN on file with Selftrade so I’m supposed to exempt from any US taxes, yet when I got my AAPL dividend they withheld 15% tax. I was wondering i anyone else who uses Selftrade.co.uk got tax withheld on their precious dividend?

    “Terms: The dividend was paid at the rate of USD 2.65 per share converted at a rate of 0.636670 GBP to USD to holders of the stock on 9 August 2012 and a rate of 15% withholding tax was applied.”

    I’ve contacted selftrade about the error and am waiting a reply…

    Thanks

         
  • Posted: 24 August 2012 01:01 AM #1

    zebrum - 24 August 2012 02:58 AM

    So I have a W8-BEN on file with Selftrade so I’m supposed to exempt from any US taxes, yet when I got my AAPL dividend they withheld 15% tax. I was wondering i anyone else who uses Selftrade.co.uk got tax withheld on their precious dividend?

    “Terms: The dividend was paid at the rate of USD 2.65 per share converted at a rate of 0.636670 GBP to USD to holders of the stock on 9 August 2012 and a rate of 15% withholding tax was applied.”

    I’ve contacted selftrade about the error and am waiting a reply…

    Thanks

    If I remember, you have to fill out form not to be taxed as uk and us have ax agreement. At least that’s how it was for Canada .

         
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    Posted: 24 August 2012 09:56 AM #2

    mstefa - 24 August 2012 04:01 AM


    If I remember, you have to fill out form not to be taxed as uk and us have ax agreement. At least that’s how it was for Canada .

    What form is this? I got hit with the Tax in my Canadian account.

         
  • Posted: 24 August 2012 10:41 AM #3

    CdnPhoto - 24 August 2012 12:56 PM
    mstefa - 24 August 2012 04:01 AM


    If I remember, you have to fill out form not to be taxed as uk and us have ax agreement. At least that’s how it was for Canada .

    What form is this? I got hit with the Tax in my Canadian account.

     

    What form do I fill out and whom do I send it to, to stop U.S. withholding tax on U.S. dividends? I hold these in both my RRSP and tax-free savings account and understand that only the RRSP qualifies for the relief.

    With an RRSP, no form is necessary and your RRSP issuer should be taking care of that on your behalf to ensure that no withholding tax is being taken off U.S. dividends paid to your Canadian RRSP. If tax is being withheld, contact your RRSP issuer immediately to get the matter resolved.

    TFSAs do not qualify for this complete exemption. However, they still qualify for a reduced 15 per cent treaty rate on U.S. dividends (which is less than the 30 per cent U.S. statutory non-treaty rate). A TFSA holder is required to complete a W-8BEN Form to be eligible for this reduced withholding.

    I was under the impression that by completing form W-8, one can avoid the 15 per cent withholding U.S. tax on U.S. dividends in a non-registered account. This information comes from my son, a previous Merrill Lynch trader and founder of a hedge fund in New York. Is this correct?

    A: No. The W-8BEN Form only gets you a reduction from the 30 per cent U.S. statutory withholding rate to 15 per cent withholding on U.S.-source dividends paid to a non-registered account.

         
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    Posted: 24 August 2012 10:44 AM #4

    Thanks.

    Yea, I got hit by the tax in my Investment account. Guess it offsets taxes I’ll have to pay next year.

         
  • Posted: 24 August 2012 06:22 PM #5

    zebrum - 24 August 2012 02:58 AM

    So I have a W8-BEN on file with Selftrade so I’m supposed to exempt from any US taxes, yet when I got my AAPL dividend they withheld 15% tax. I was wondering i anyone else who uses Selftrade.co.uk got tax withheld on their precious dividend?

    “Terms: The dividend was paid at the rate of USD 2.65 per share converted at a rate of 0.636670 GBP to USD to holders of the stock on 9 August 2012 and a rate of 15% withholding tax was applied.”

    I’ve contacted selftrade about the error and am waiting a reply…

    Thanks

    The standard holding tax (WHT) on US dividends is 30%. This is reduced to 15% under the UK-US double taxation agreement. Consequently after filling out form W8-BEN, the dividends I received on my Apple shares held in an ISA had 15% WHT deducted.
    However the dividends I received for my Apple shares held in my SIPP were received gross, as there is zero WHT for US share dividends within a SIPP.

         
  • Posted: 31 August 2012 01:20 PM #6

    Question for rob_london

    Withholding tax has been charged on my Selftrade SIPP, so I’m wondering which SIPP prodivder do you use?

    As you write, form W-8 BEN reduces the standard withholding rate from 30% to 15%. The 15% applies even when the dividends are received in an ISA.
    For SIPPs, there’s a provision in paragraph 3(b) of article 10 of the treaty that states “dividends shall not be taxed ... if the beneficial owner of the dividends is a pension scheme”.

    The devil is in the details as to what qualifies as a pension scheme, and the following page offers some guidance
    http://www.irs.gov/irb/2005-18_IRB/ar10.html
    Basically, it seems only SIPPs offered by insurance companies (eg Standard Life) get the zero rate, otherwise, you pay the 15% provided you have filled in form W-8 BEN.

    Is this correct or do people have other experiences?

         
  • Posted: 04 September 2012 07:40 AM #7

    I invest with TD Direct Investing (ex TD Waterhouse). I wrote to them to check the tax situation on my AAPL shares held in a SIPP. They have just sent me written confirmation that a W8-BEN brings the tax on US Incorporated dividends down from 30% to 0% when the stocks are held in a SIPP. The latter is administered by AJ Bell.

         
  • Posted: 07 September 2012 02:34 AM #8

    Thank you so much Rob.

    I invest with SelfTrade and my SIPP is provided by sippdealxtra, which is itself part of AJ Bell, so I guess the issue is with SelfTrade. They sent me a standard boilerplate answer (filling the W8BEN form reduces withholding tax to 15%, no mention what happens when investing through a pension scheme), including a link to an IRS page that didn’t work. I’m going to try with both of them again.
    Have a good weekend

         
  • Posted: 10 September 2012 05:29 PM #9

    Update on the above. Spoken to both Selftrade and. AJ Bell. They both confirmed that the IRS levies withholding tax at 15%. At the close of the tax year (in fact, tax statements/vouchers are being prepared and sent right now, five months later), Selftrade passes on the information to the SIPP administrator, which then in theory contacts the US authorities to reclaim any tax overpaid. So in due course you may get back the tax paid on Apple and other US dividends. I will believe it when I see it, but there seems to be a process in place.