Looking for a recommendation on a U.K broker

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Looking for a recommendation on a U.K broker

Postby trademil » Fri Mar 22, 2013 12:45 pm

Hello,

I'm an European investor currently implementing the 3-fund portfolio. To save the troubles of the U.S tax code I'm considering directing my future savings to Vanguard® FTSE All-World ETF (VWRL) that is traded on the LSE, instead of VTI+VXUS (Vanguard Total International Stock ETF + Vanguard Total Stock Market ETF) which I currently use for all of the equity side of my portfolio.

(Is there any reason I wouldn't want to do that?)

Are that any U.K people here who can recommend a good, reliable broker that accepts foreign (non U.K) clients?

Thanks.
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Re: Looking for a recommendation on a U.K broker

Postby trademil » Sat Mar 23, 2013 5:55 pm

Nobody? :-(
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Re: Looking for a recommendation on a U.K broker

Postby Valuethinker » Sat Mar 23, 2013 6:17 pm

I am not in a position to tell you whether Selftrade, Barclays etc. accept non UK residents.

I would imagine not. You probably have to use a stockbroker in your own country. Perhaps you could find one in Luxembourg that would accept you?
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Re: Looking for a recommendation on a U.K broker

Postby trademil » Sat Mar 23, 2013 6:44 pm

Thanks. I'll be happy to just get recommendation for brokers and then I can check by myself if they accept non-UK people. Do you recommend Selftrade and Barclays? any others?
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Re: Looking for a recommendation on a U.K broker

Postby Valuethinker » Sun Mar 24, 2013 4:38 am

trademil wrote:Thanks. I'll be happy to just get recommendation for brokers and then I can check by myself if they accept non-UK people. Do you recommend Selftrade and Barclays? any others?


trademil

Those happen to be ones I have dealt with. Not sure whether they are competitive with charges. As you probably know with money laundering rules, it's a pain to switch brokers.

For SIPPs (Self Invested Personal Pensions) I probably would have gone with Alliance Trust, and they also I presume do a share trading platform.
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Re: Looking for a recommendation on a U.K broker

Postby helfordpirate » Sun Mar 24, 2013 8:27 am

This is the most comprehensive survey I have found...

http://monevator.com/compare-uk-cheapes ... e-brokers/

I am with HL - not the cheapest, but service is good and decent range of funds etc. Just avoid anything to do with a high street bank or worse private bank at all cost!
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Re: Looking for a recommendation on a U.K broker

Postby Valuethinker » Sun Mar 24, 2013 12:38 pm

helfordpirate wrote:This is the most comprehensive survey I have found...

http://monevator.com/compare-uk-cheapes ... e-brokers/

I am with HL - not the cheapest, but service is good and decent range of funds etc. Just avoid anything to do with a high street bank or worse private bank at all cost!


Thank you!

Good list!

I agree re finding someone whose service you are happy with.
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Re: Looking for a recommendation on a U.K broker

Postby trademil » Mon Mar 25, 2013 4:46 am

Government taxes and levies (per deal)
1% on purchases of Irish shares
0.5% on purchases of UK shares


Is this for real?
Now I understand why VWRL (domiciled in Ireland) is not that popular...
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Re: Looking for a recommendation on a U.K broker

Postby Valuethinker » Mon Mar 25, 2013 5:16 am

trademil wrote:
Government taxes and levies (per deal)
1% on purchases of Irish shares
0.5% on purchases of UK shares


Is this for real?
Now I understand why VWRL (domiciled in Ireland) is not that popular...


This is called Stamp Duty. It''s been around for at least the postwar period since 1945 I think. Does not apply to new issues (ie new capital raisings by companies). Applies to all listed securities on a British stock exchange (and, I guess, any deal for a foreign share through a UK broker?).

On buying a property, it is 4% (scaled, goes up to 5%, but on the WHOLE amount when you go over a threshold).

Note the EU is imposing a financial transactions tax (google 'Tobin Tax' and you'll learn about the economic background). So this is a general thing.

Schemes to avoid Stamp Duty are generally illegal-- you'll get caught, eventually.
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Re: Looking for a recommendation on a U.K broker

Postby TedSwippet » Mon Mar 25, 2013 5:41 am

Valuethinker wrote:...Applies to all listed securities on a British stock exchange (and, I guess, any deal for a foreign share through a UK broker?).

Not all.

Foreign domiciled ETFs escape. And it's an important exception -- UK investors rarely, if ever, pay stamp duty on ETFs. iShares' and Vanguard's UK listed ETFs are all domiciled either in Ireland or Luxembourg. From April next year UK domiciled ETFs and funds should also be free of stamp duty; announced in last week's budget.
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Re: Looking for a recommendation on a U.K broker

Postby trademil » Mon Mar 25, 2013 7:15 am

TedSwippet wrote:
Valuethinker wrote:...Applies to all listed securities on a British stock exchange (and, I guess, any deal for a foreign share through a UK broker?).

Not all.

Foreign domiciled ETFs escape. And it's an important exception -- UK investors rarely, if ever, pay stamp duty on ETFs. iShares' and Vanguard's UK listed ETFs are all domiciled either in Ireland or Luxembourg. From April next year UK domiciled ETFs and funds should also be free of stamp duty; announced in last week's budget.


But, correct me if I'm wrong, for Ireland domiciled ETF (such as VWRL) I need to pay even higher tax (1% versus 0.5% on U.K domiciled shares).
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Re: Looking for a recommendation on a U.K broker

Postby TedSwippet » Mon Mar 25, 2013 8:23 am

trademil wrote:...But, correct me if I'm wrong, for Ireland domiciled ETF (such as VWRL) I need to pay even higher tax (1% versus 0.5% on U.K domiciled shares).

Assuming you're asking "Do I pay a 1% charge on buying an Irish domiciled ETF on the LSE?", the answer is no, you don't. Nor do you pay the 0.5% UK stamp duty that would apply if you bought a UK non-ETF share on the LSE. In other words, ETFs are all free of stamp duty.

From LSE FAQs:
Exchange Traded Funds (ETFs) give investors the chance to buy whole indices as easily as buying a share on the London Stock Exchange. Eligible for inclusion in ISAs but attracting no stamp duty,...

The logic (such that it is!) would be that ETFs contain shares on which stamp duty is already paid (by the fund managers but passed on, of course, in lower returns). I have purchased several iShares over the years, and never paid anything in up-front costs beyond the plain broker dealing fee. Are you sure you're not confusing stamp duty on an ETF purchase with stamp duty that the fund manager might have to pay when purchasing UK (or Irish) shares inside a fund?
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Re: Looking for a recommendation on a U.K broker

Postby helfordpirate » Mon Mar 25, 2013 9:22 am

Definitely no stamp duty on buying ETFs on the London Stock Exchange - they are all(?) non-UK domiciled.

As Ted says the fund manager will be paying it on the trades and taking it from the fund - all the more reason to check the PTR is nice and low!

btw As another "gotcha", Vanguard charge an initial fee of 0.5% on their UK funds (OEIC not ETF) which are UK domiciled and trade in UK equities or gilts. They explain it as a charge for SDRT on new contributions so that existing unit holders are not penalised for the trades they will take to create the new units. Fair and transparent I guess..
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Re: Looking for a recommendation on a U.K broker

Postby TedSwippet » Mon Mar 25, 2013 9:55 am

helfordpirate wrote:...btw As another "gotcha", Vanguard charge an initial fee of 0.5% on their UK funds (OEIC not ETF) which are UK domiciled and trade in UK equities or gilts...

<nitpick>
Vanguard charges 0.5% SDRT on funds that invest in UK equities, but the 0.1%-0.2% on gilt funds (and whopping 0.75% on the corporate bond fund) is a "dilution levy". Effect is of course the same -- another piece chipped out of investment return.
https://www.vanguard.co.uk/documents/portal/company/fund-summary.pdf
</nitpick>
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Re: Looking for a recommendation on a U.K broker

Postby trademil » Mon Mar 25, 2013 12:16 pm

TedSwippet wrote:Assuming you're asking "Do I pay a 1% charge on buying an Irish domiciled ETF on the LSE?", the answer is no, you don't.


Thanks! that was my question, so this brings my VWRL plan back to the table.
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Re: Looking for a recommendation on a U.K broker

Postby Valuethinker » Mon Mar 25, 2013 12:30 pm

Just wanted to thank Ted Swippet (and others) for straightening me out re Stamp Duty and ETFs.

I should know that-- after all unit trusts don't pay stamp duty.

But I did not.
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