Is VWRD the one ring to rule them all?

Index tracking funds and ETFs
1nv35t
Lemon Slice
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Joined: November 4th, 2016, 8:18 pm

Re: Is VWRD the one ring to rule them all?

Postby 1nv35t » January 4th, 2017, 11:22 pm

hiriskpaul wrote:Is it going into a SIPP? If so you might want to consider a US listed ETF instead, such as Vanguard's Total World Stock ETF (VT). This has a lower TER of only 0.14%, but more importantly will pay dividends from the contained US shares completely free of withholding taxes. This will rely on your SIPP provider supporting this zero-WHT option. Hargreaves Lansdown and Youinvest do.

If you hold more than around $60K of US assets, then if you get run over by a bus your assigned probate team will have to register (and pay) US Estate Tax before the assets will be released. For most that's not so much of a tax risk as US/UK treaty has us on the same standing i.e. something like $5M of asset wealth before tax becomes liable (zero rated), and more of a paperwork/delay risk, perhaps involving a higher cost legal agent who is familiar with the process/requirements.

With a UK or Ireland domiciled ETF that risk is eliminated (easier probate).

Outside of SIPP and non UK Reporting Registered funds (most US listed ETF's wont be UK reporting registered) have all capital and income gains counted as being income taxable by HMRC.

hiriskpaul
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Joined: November 4th, 2016, 1:04 pm

Re: Is VWRD the one ring to rule them all?

Postby hiriskpaul » January 4th, 2017, 11:41 pm

1nv35t wrote:
hiriskpaul wrote:Is it going into a SIPP? If so you might want to consider a US listed ETF instead, such as Vanguard's Total World Stock ETF (VT). This has a lower TER of only 0.14%, but more importantly will pay dividends from the contained US shares completely free of withholding taxes. This will rely on your SIPP provider supporting this zero-WHT option. Hargreaves Lansdown and Youinvest do.

If you hold more than around $60K of US assets, then if you get run over by a bus your assigned probate team will have to register (and pay) US Estate Tax before the assets will be released. For most that's not so much of a tax risk as US/UK treaty has us on the same standing i.e. something like $5M of asset wealth before tax becomes liable (zero rated), and more of a paperwork/delay risk, perhaps involving a higher cost legal agent who is familiar with the process/requirements.


Not if in a SIPP. A SIPP is not part of your estate and not subject to US estate taxes. AFAIK the SIPP trustees do not even require probate in order to hand the SIPP to beneficiaries. Estate creditors have no right to your SIPP either. Not sure if that applies to HMRC though.


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