Growth-themed index fund/ETF (US or global)?

[mrodent]

It applies to all UK (and EU) brokers ... but umm, hello ... viewtopic.php?p=646339#p646339

Oops, sorry! I did read your post at the time but my attention was somewhat distracted at the time by trying to understand what you meant by "the x-o broker was making an assumption".

[hiriskpaul]

I have professional investor status with IG and they allow me to buy US listed ETFs.

A word of warning for any going down this route. Most US listed ETFs do not have UK reporting status, which means any gains you make will be taxed as income, not capital gains. Fortunately most Vanguard ETFs do have UK reporting status, but best to check before you trade. HMRC publish UK reporting funds here:

https://www.gov.uk/government/publicati ... ting-funds

Edit: it is advantageous to buy US listed ETFs if you are able as you get a 15% tax credit on the dividends because of US withholding tax. You can use this to reduce your UK income tax liability on those dividends. This tax credit is unavailable if you by an EU listed UCITS ETF. The ETF still suffers the 15% dividend withholding tax, but you don't get a tax credit.

[mrodent]

Edit: it is advantageous to buy US listed ETFs if you are able as you get a 15% tax credit on the dividends because of US withholding tax. You can use this to reduce your UK income tax liability on those dividends. This tax credit is unavailable if you by an EU listed UCITS ETF. The ETF still suffers the 15% dividend withholding tax, but you don't get a tax credit.

Interesting... because a lot of ETFs you see available to buy on UK platforms turn out to be Irish-domiciled. I just googled on this and was somewhat shocked to find that as a UK taxpayer not only do you get 15% sliced off at source ... but you then have to pay UK dividend tax on the 85% that you do receive. According to this, at least:

https://www.investorschronicle.co.uk/20 ... ticle.html

... very few of my holdings are generating much in the way of dividends as it happens but I'm glad you drew attention to this. By the way, do you know whether fund-funds (as opposed to ETFs) have the same tax treatment if domiciled in Ireland? Also, is there any significance to the fact that you said "UCITS ETF"? What's the situation with a non-UCITS ETF (if such a thing exists, which I think it does)?

[Lootman]

I have professional investor status with IG and they allow me to buy US listed ETFs.

A word of warning for any going down this route. Most US listed ETFs do not have UK reporting status, which means any gains you make will be taxed as income, not capital gains. Fortunately most Vanguard ETFs do have UK reporting status, but best to check before you trade. HMRC publish UK reporting funds here:

https://www.gov.uk/government/publicati ... ting-funds

Edit: it is advantageous to buy US listed ETFs if you are able as you get a 15% tax credit on the dividends because of US withholding tax. You can use this to reduce your UK income tax liability on those dividends. This tax credit is unavailable if you by an EU listed UCITS ETF. The ETF still suffers the 15% dividend withholding tax, but you don't get a tax credit.

Another thing to realise about any US-listed fund, ETF or other, is that they are mandated to distribute capital gains as they are realised. So you may have an annual CGT liability even if you do not sell.

Luckily by the nature of ETFs they tend to not usually generate annual capital gains, but it can happen.

[hiriskpaul]

Edit: it is advantageous to buy US listed ETFs if you are able as you get a 15% tax credit on the dividends because of US withholding tax. You can use this to reduce your UK income tax liability on those dividends. This tax credit is unavailable if you by an EU listed UCITS ETF. The ETF still suffers the 15% dividend withholding tax, but you don't get a tax credit.

Interesting... because a lot of ETFs you see available to buy on UK platforms turn out to be Irish-domiciled. I just googled on this and was somewhat shocked to find that as a UK taxpayer not only do you get 15% sliced off at source ... but you then have to pay UK dividend tax on the 85% that you do receive. According to this, at least:

https://www.investorschronicle.co.uk/20 ... ticle.html

... very few of my holdings are generating much in the way of dividends as it happens but I'm glad you drew attention to this. By the way, do you know whether fund-funds (as opposed to ETFs) have the same tax treatment if domiciled in Ireland? Also, is there any significance to the fact that you said "UCITS ETF"? What's the situation with a non-UCITS ETF (if such a thing exists, which I think it does)?

UCITS funds follow an EU rulebook for managed funds and publish Key Investor Information Documents (KIIDs). UCITS funds can be marketed to retail investors but non-UCITS funds cannot. EU UCITS funds are available to UK investors but UK UCITS funds are no longer available to EU investors due to the loss of passporting rights following Brexit. A non-UCITS fund is essentially any fund that is not UCITS. US listed ETFs for example.

All other types of UCITS funds, eg ITs and OEICS, pay 15% US dividend withholding tax. There are exceptions when it comes to pension funds, but as far as I know these funds are not available to SIPPs.

[hiriskpaul]

I have professional investor status with IG and they allow me to buy US listed ETFs.

A word of warning for any going down this route. Most US listed ETFs do not have UK reporting status, which means any gains you make will be taxed as income, not capital gains. Fortunately most Vanguard ETFs do have UK reporting status, but best to check before you trade. HMRC publish UK reporting funds here:

https://www.gov.uk/government/publicati ... ting-funds

Edit: it is advantageous to buy US listed ETFs if you are able as you get a 15% tax credit on the dividends because of US withholding tax. You can use this to reduce your UK income tax liability on those dividends. This tax credit is unavailable if you by an EU listed UCITS ETF. The ETF still suffers the 15% dividend withholding tax, but you don't get a tax credit.

Another thing to realise about any US-listed fund, ETF or other, is that they are mandated to distribute capital gains as they are realised. So you may have an annual CGT liability even if you do not sell.

Luckily by the nature of ETFs they tend to not usually generate annual capital gains, but it can happen.

Yes I have received a few capital distributions from US ETFs, although the last was about 10 years ago. Fortunately these distributions were from ETFs held in our SIPPs, so they did not matter.

[International]

I just tried to order a buy of some Vanguard VUG (growth ETF). I got a message, "Order cannot be placed" and below "Client has legal residence in EU country and is not eligible to purchase US registered ETFs and ETNs."

I'm sorry this ended up as a pain. Although I have been using a US broker, I've using it for a stock, rather than an ETF. Sorry if it took you down a dead end.

Did you buy a US stock in the end, or do you plan to close the account?

[mrodent]

I'm sorry this ended up as a pain. Although I have been using a US broker, I've using it for a stock, rather than an ETF. Sorry if it took you down a dead end.

Did you buy a US stock in the end, or do you plan to close the account?

Not your fault in any way! In fact someone earlier warned me about the horror of PRIIPs but I had to learn the hard way.

No, I was only interested in specific US index ETFs. It's perfectly easy to buy US shares (e.g. I have lots of BRK.B) with UK investment platforms, although you obviously have to be very careful about exchange rate policies: some of these platforms seem to make a substantial part of their income streams from dodgy and little-publicised FX "scams".