Charlie Parker: Why I'm buying into the US for my Sipp

I think we should boycott America after Obama's stance on BP & the dividend.

If the Americans were not so greedy for cheap oil the deep drilling would not have happened - they are a gready bunch those Americans .

Support BP ....

Obama's 'handling' of BP has been pathetic and reminded me of Gordon Brown's handling of anything more complicated than ordering a cup of tea.

Opportunistic and popularist - signs of desperation this early do not bode well.

BP will still there long after Obama isn't.

Obama attitude is hard to swallow unless he is subsequently supported by evidence of real negligence/carelessness

BP got into all this trouble when it

bought AMOCO. It should immediately

split off all the US interests and rename

the vehicle AMOCO. (American Oil Coy)

Then lets here the Muslim president say

that he has his boot on AMOCO's neck.

All this claim nonsense il Louisiana is brought

about by the US's claim culture. If it was not for

BP Louisiana would be on its knees. BP is the

biggest employer in the state. The fishing

industry was dying before this incident

cant compete with imported seafood from the

far east.

If Cam/Cleg had any balls they would say to

US restrain your mouths or troops come out

of Afghanistan next week and we will refuse to

cooperate on any extradition cases.

Americans (not all but in general) have reacted immaturely to the BP issue. Too much emotion, too much hyperbole, too little thought. The US demanded cheap and locally sourced oil. The authorities allowed corners to be cut in the quest for oil that didn't rely on imports. They have now put limits on production in the Gulf - they will either have to back down or pay the price for more expensive oil. They are vindictively pursuing an essentially good company - one that produces wealth and creates jobs. This is in the Anglo / American tradition. Those that are trying to destroy them, public servants, are consumers of wealth. Barack Obama (B.O.) has demonstrated that he is not a leader but a follower. He is not strong but reactionary. What more can you expect from a nation that hounded the Beatles, at their height, out of the U.S. for John Lennon's (in his early 20s) comment that the Beatles were more famous than Jesus.

Hi Charlie,

HL doesn't allow you to reclaim US dividend tax via the IRS W8 BEN form. This is exactly why I moved from HL to Sippdealextra/ Selftrade recently.

Now, if you and I buy exactly the same investments via our respective SIPPs, you will be paying more tax.

I asked HL to sort this and altho they recognized the issue, they were not willing to implement the W8 BEN process which would have reduced the tax exposure.

What is the W-8BEN? By completing this form, UK investors can claim exemption from paying US tax on dividends and interest from shares traded in the US, as such income will already fall under UK income tax rules.

You'll see more here:

http://www.selftrade.co.uk/forms/w8ben.php

I'm not affiliated with Selftrade - i just don't like paying unnecessary tax.

Hope this helps

Is this a genuine article or advertisement for certain funds and SIPP providers.

If a SIPP provider who is expensive to buy etf is expensive why can't you change it?

Cetainly you are not trying to suggest that one should not build their portfolio without ETF ?

Hi anon 4, I'm a regular punter and the above is not an advert - I had a long-running discussion with HL re taxes on dividends within a SIPP. In short, the HL doesn't reclaim all the tax that they could reclaim on US-based investments - so I moved from HL (after staying with them for 4 years)

Sadly, most people are unaware of this important issue :)

Be careful. The USA is the biggest debtor nation by far. Some day this will have to be resolved.

Do I detect more than just a touch of racism Anonymous 3? Muslim president?

You need your head examined. Not surprised you made the comment anonymous.

We are indebted to Charlie for making us aware of Ciywire's research. On the face of it his deliberations appear sound, however the circumstances that will exist when he reaches retirement age are impossible to predict, therefore when planning such long term investments my strategy would be to buy index tracker funds, which I could contribute to on a monthly basis. It would be cheaper to set up, dividends should cover management costs, and would provide the basis for making forecasts, assuming positive developments occur.

In the short term, to say that I'm bearish would be an understatement. Polar bearish would be nearer the mark. The 2007 credit crunch was more than a milestone of history, it is developing into a watershed point. The most significant indicators are the US Govt's contentions with Wall street in general and Goldman Sachs in particular. Angela Merkel, Nicholas Sarcosy, and Vince Cable are all determined to ring fence the casino operations of powerful banks, and it looks like their are no suckers left willing to take dodgy CDO,s and Govt Bonds. The lack of liquidy is set to continue, which means p/e ratios will remain low, the values of tangible and intangible assets will have to be revised lower, and companies will strive to reduce their debts in preference to implementing expansion plans.

Batten down the hatches, we are heading for the perfect storm.

Can we stick to Charlie's strategic arguments, pro and con? There are plenty of threads to comment on BP and Obama.

Charlie seems to pin hopes on the dollar as a safe haven from the euro (and by infection, sterling) and on the US economy continuing to come a lot faster out of the traps than the Eurozone- while China may be riding for a fall.

There is a contrary view, that American double-dip is a distinct risk, which has been interestingly put forward by the Consumer Metrics Institute. See its new lead-indicator index of consumer discretionary spending and GDP growth or contraction, graphed here:

http://www.consumerindexes.com/

It implies, on the established 4-5 month lag, that the USA will indeed relapse as the second half of 2010 wears on. This contradicts widespread predictions of 3-5% growth year on year, but should be attended to.

John Mauldin, the investment manager who writes 'Outside the Box', points out that such a recession has hitherto been associated with a fall of up to 40% on Wall Street. After so much Obarminess and manipulation through stimulus in the Dow rally of the last 12 months or more, soon to be abruptly replaced by tax hikes and job cuts, the CMI index is a big red warning signal.

A good move, the USA is still going to be the 2nd largest country by GDP in about 2050, and the USA is picking up again, impossible really to time markets.

Eclecticas agriculture fund has been a bit of a poor performer as have other agri. funds. Does anyone out there have a good agriculture angle?

Peter Duffy that was useful info on the US divi tax. thx

Good old Charlie is buying a fund, Neptune US Opp. Claiming tax on US divi is irrelevant for him.

Hargreaves Lansdown and tax

Thank you to Peter and the other bloggers for pointing out this issue with Hargreaves Lansdown and tax. I was not aware of it and I will personally take it up with Peter Hargreaves and get our readers an answer on what they are going to do about it. Hargreaves has its faults and this is certainly not an advertisment (we have written our fair share of negative things in the past) but one thing they are good at there is giving straight answers. Watch this space.

Okay Charlie I seem to be taking the route you do not recommend - I am with HL and bought my first ETF this week [the new HSBC S&P 500] I confess I find their service first class but was unaware of this tax issue, I found the costs reasonable but as I say I'm a 'newbie' on ETF's. As for BP I filled my boots with them today, don't really mind if the divi is 'delayed' for a quarter or two as the capital appreciation in the shares should be reward in itself - As for Obama I have always been pro American but that is wearing very thin - The land of the free with a President dictating dividend payments by a multi-national? And he criticises China? He may be too young to remember Union Carbide but he might like to dig out the senior managers still hiding behind the US flag and send them to India!

Hargreaves Lansdown has responded to the question over why it is not able to claim back the tax paid on US dividends by holders of US equity funds investing through its Vantage platform.

The group has said that the tax, which strips 15% off the value of dividends paid out, is being looked at closely and that it hopes to have reached a conclusion by the end of this US tax year - which runs until January.

The group said that it is a complicated problem to solve because in order to not pay the tax it would have to offer a guarantee that nobody in its nominee account - which actually purchases the units - was a US taxpayer.

However, it said that it is looking for a way around the problem and it is also evaluating whether it is possible to re-claim the tax that has already been paid.

The firm said it does not know why other sipp providers are able to do this while it is not and speculated that they may 'assume' that none of its holders are US taxpayers. It is concerned about the liability associated with this. It would remain concerned it said about its own liability even if it asked investors whether they were liable in case they were lying.

Apologies that last post was Charlie Parker and not Gareth WIlliams talking.

Nice call on the US there Charles

A small part of my SIPP fund is in a 'mad money' investment, well not quite so mad. This a newish small mining company operating in SA, but is Australian, mining chrome ore. No debts, and has already paid a maiden divi.

Because of the downturn the price is low, but steel is an essential so when they have run out of stock, the manufacturers users will have to buy, and the price of chrome ore continues to rise from its lows. My outlay 2% of my fund, but if it really comes good the value is likely to be about 10% of the fund, maybe double that.

As for the US tax, if you complete the form, the co trustee must sign as it will benefit the fund, and they are obliged to act where the is benefit to the fund. If not, they must stump up the potential loss, a trustee must not act against the interests of the fund/beneficiary, and no exemption will save them.