How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Merlo Your Own Question
Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
Type Your Tax Question Here...
Merlo is online now
A new question is answered every 9 seconds

dividend withholding tax for USA shares held by UK resident

This answer was rated:

I have just bought £50,000 of USA dividend-paying shares with HSBC who processed W-8BEN & A & B forms for NYSE and Nasdaq so as to avoid me having to pay US tax on my dividend income as I am UK resident. I have also put £50,000 into a Hargreaves Lansdown SIPP and £30,000 into a non-tax-wrapped sharetrading account with them. HL refuse to process these US tax forms so I will have to pay US tax on dividend income. Is this just a management oversight on behalf of HL or is there a reason UK taxpayers would pay this US tax and not lose out in the UK on their balance of tax? My current thinking is simply to transfer out of HL and into a company that will allow the process of these USA tax forms but I am so confused now about what to do. Please help, it will be much appreciated!

If you are a nonresident alien holding stock in the US, you are not subject to US tax on any capital gains realized from the sale of those stocks. However, dividends received from those stocks are taxable.

The dividends are taxable at a flat rate of 15% in accordance with the US/UK tax treaty. Refer to Article 10 which discusses taxation on dividends.

If you have filled out the W-8BEN form and claimed your tax treaty benefits, then the investment firm should not be withholding more than 15% on the dividends you receive. If they are withholding more than that amount, you can file a tax return with the US at the end of the year on Form 1040NR used by nonresidents, and claim a refund for any excess amount which was withheld.

If this was helpful please press the Accept button. Positive feedback is also appreciated.

Thank youCustomer and let me know if you have more questions.

Customer: replied 7 years ago.
Thanks Merlo, that clears it up a bit. As it stands I have submitted the W8-BEN form with one broker (HSBC) so that should be fine, as that will mean I have claimed my tax treaty benefits with them. I assumed the new broker I have chosen for my pension (Hargreaves Lansdown) would do the same but they refuse to handle these forms, so presumably, as you point out, investors must claim on a US tax return to claim a refund on excess tax held. This seems the least preferred option as it would make sense to set up stock purchasing with the treaty benefits handled at source (broker) so as not to have to sumbit a return to US tax authorities each year, not to mention the administrative hassle. A little further information would help to resolve my remaining issues and close this answer.

Can you explain how my dividends received with the new broker Hargreaves Lansdown, that will not handle these forms for me, will be taxed? Should I assume that the full 30% will be taken from these dividends and lost to me if I do not submit a US tax return annually to recover this? Further I also have a share trading account with this company, just like the HSBC one I hold, but I also have a SIPP (self invested personal pension) with them in which I can directly buy shares. Would the holdings within this pension wrapper be subject to any different tax consideration from the US perspective in comparison to my standard share trading holdings? I ask because I read the tax treaty that you referred to and it states:

3. Notwithstanding the provisions of paragraph 2 of this Article, dividends shall not be
taxed in the Contracting State of which the company paying the dividends is a resident if the beneficial owner of the dividends is a resident of the other Contracting State and either:
a) a company ....
b) a pension scheme, provided that such dividends are not derived from the
carrying on of a business, directly or indirectly, by such pension scheme.

This would seem to suggest that my pension holdings should be subject to zero tax. Or am I misunderstanding the text?

Many thanks for your attention in this matter.
Hello againCustomer

The dividends that you receive on stocks you hold through your personal pension would still be subject to tax. In paragraph #3 that you sited, when they refer to "pension scheme", they are referring to a company that offers a pension to its employees where contributions from the employee are not required. The zero percent tax does not apply to stocks you purchase through your own personal pension funds, so the 15% tax would still apply.

If Hargreaves Lansdown will not handle the W-8BEN forms, then they under US law they would withhold a full 30% tax on the dividends. They should still not withhold any tax on the sale of the shares, but only on dividends paid. If they do withhold at this higher rate of 30%, the only recourse you have to recoup the difference of 15% is by filing a tax return each year with the US. If you prefer not to deal with this paperwork, then you would just end up forfeiting the extra taxes which were withheld.

I think the best case scenario for you would be to find another broker who will handle the W-8BEN for you, as then they should withhold the appropriate tax of 15% and you would not have to be burdened with filing a US tax return to obtain a refund.

If this was helpful please press the Accept button. Positive feedback is also greatly appreciated.

Thank youCustomer and let me know if you need more help here.

Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
Merlo and 4 other Tax Specialists are ready to help you
Customer: replied 7 years ago.
Merlo, ,many thanks, XXXXX XXXXX a gem! I've been searching for this info to get my head around it for weeks, so you've been a big help. Best regards XXXXX XXXXX newbie Brit who is most impressed with, I'll be back!


Thank youCustomerfor the kind words.

Come back any time that you need help.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Previous | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA

Meet The Experts:

  • Wallstreet Esq.

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    10 years experience
< Last | Next >
  • Wallstreet Esq.'s Avatar

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    10 years experience
  • Mark D's Avatar

    Mark D

    Enrolled Agent

    Satisfied Customers:

    MBA, EA, Specializing in Business and Individual Tax Returns and Issues
  • Richard's Avatar


    Tax Attorney

    Satisfied Customers:

    29 years of experience as a tax, real estate, and business attorney.
  • Robin D.'s Avatar

    Robin D.

    Senior Tax Advisor 4

    Satisfied Customers:

    15years with H & R Block. Divisional leader, Instructor
  • Megan C's Avatar

    Megan C

    Certified Public Accountant (CPA)

    Satisfied Customers:

    Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
  • jgordosea's Avatar


    Enrolled Agent

    Satisfied Customers:

    I've prepared all types of taxes since 1987.
  • R. Klein, EA's Avatar

    R. Klein, EA

    Enrolled Agent

    Satisfied Customers:

    Over 20 Years experience