Overseas investment (shares) taxation?

[gandhi]

Following on from a recent thread regarding whether it was a good time to buy US currency, I have a question regarding tax.

I'm considering buying some assets in the US, like shares in a big firm, rather than just currency. The ploy is that hopefully the share price will increase, and the dollar will drag itself back upwards, in time, of course. Hopefully this would mean two-fold gains, all being well. One for increased share price, the other in currency gains.

I know that I'd be paying CGT on UK company shares where applicable, but if my shares are based in the US, I trust I'd also be paying the same CGT to the revenue. In the event of the dollar picking up, would I be liable to pay any similar gains taxes on the strength of the currency increase too?

Just thinking about slightly more productive investment vehicles than what I have now..

Many thanks

Edited by gandhi on Wednesday 25th July 01:59

[Eric Mc]

The value of any gains you made would also take into account increases in value (or decreases) brought about by currency fluctuations. You would indeed be liable to UK tax on these gains. If you suffered any US tax on the share dealings, you should be able to offset this tax against any additional UK taxes due. There is a Double Taxation Agreement between the US and the UK which should prevent the same pieces of income being taxed excessively in both the US and the UK.

Don't forget that any incidental income brought about by your overseas investments - such as interest or dividends - will also be declarable and taxable in the UK, subject to any Double Taxation arrangements.

[LeoSayer]

You can buy the US stocks through an ISA, making the gains tax free.

Instead of buying individual companies, you could buy an investment fund (unit trust, oeic etc) that is priced in USD.

[Horse_Apple]

LeoSayer said:

You can buy the US stocks through an ISA, making the gains tax free.

Instead of buying individual companies, you could buy an investment fund (unit trust, oeic etc) that is priced in USD.

Yup.

Or buy US stocks or funds within a SIPP. Or as a spread bet if holding for less than 6/9 months to remove the fx exposure.

Ultimately, it depends on the size of the transaction as to whether the various wrappers are cost effective and the intended duration.

If buying the physical you need to know what fx spread you'll be converting Sterling at, as that is an instant loss being booked as is the market spread of the fund. Also, cost of ISA or SIPP fees to be taken into account, plus dealing charges.