Do you pay stamp duty on UK leveraged ETFs?

📊 Investing
1

I can’t figure out the answer to this so would appreciate knowledgable input. When I buy and sell LSE (UK) leveraged ETFs, do I pay 0.5% Stamp Duty directly or indirectly?

2

Stamp Duty = UK-domiciled LSE-listed stocks and Investment Trusts.

3

No stamp duty for buying the likes of Diageo or Astra Zeneca on their US listings then?

4

This depends on what is your base currency, and on what type of account you are dealing your stocks in.

5

I have no idea if LQQ3 for example (an ETF/ETP???) is considered a LSE-listed stock or trust? Can you illuminate?

6

If it is WisdomTree NASDAQ 100 3x Daily Leveraged (GBP) | LQQ3 it’s an ETP [1] and an ETN.

[1] All ETFs, ETCs, ETNs are ETPs a.k.a. Exchange-traded Products. The major difference is the type of financial instrument, ETFs are funds, ETCs and ETNs are debt (without paying interest).

You can check the type of financial instrument in here:

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All that said, Stocks and Investment Trusts aren’t the same as ETPs, ETFs, ETCs, ETNs.

PS: You can also Google it, or search in Wikipeda or Investopedia, or ask any AI GPT.

@Team212 , maybe you should do some regular financial literacy tests and financial education contents for most customers. :wink:

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7

Is this for UK residents or for everyone? For some reason I don’t pay this ‘stamp duty’ on my Shell and Rio Tinto weekly purchases.

8

T212 discloses the taxes and fees (“Government taxes & levies”):
https://www.trading212.com/terms/invest

I’m not UK resident and had paid Stamp Duty on UK Investment Trusts. This kind of taxes isn’t about territoriality of investors. Is about the instruments and where are listed (transitioned).

There are UK stocks also listed in other countries and ADRs/GDRs of UK stocks outside of UK. And their legislation/taxation is different from UK.

9

This is the gist of it and correct.

no. Diageo listed on nasdaq(NSDQ:DEO) and nyse are either “secondary” listings, which are still liable for stamp duty or ADSs (which somehow incur even more stamp duty) This may get more complicated though depending on venue, order and execution. One example I can think of is some depository receipts pay stamp duty when they are “bought” and put into ADS/ADR so the end customer won’t see an additional charge for stamp duty.

AFAIK it does not, you will still pay stamp duty regardless of the wrapper (even in SIPP which has the biggest tax savings)
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it is not for UK residents only. AFAIK you gotto be paying stamp duty. Rio Tinto is dual listed on ASX and LSE but I doubt you are buying the ASX listings. I’d say google is your friend.

stamp duty is one of those ancient taxes born centuries ago and pretty unavoidable because it’s definition is so broad and unforgiving, tories were trying to get rid of it for stock market but they did not live long enough :sweat_smile:

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10

Why has it got the largest tax savings?

Is it less widtholding taxes on dividends from “foreign” companies due to country agreements?

11

Yes, zero WHT especially from US stocks is a huge saving (at least for myself)

Also if you are earning enough to be in high rate tax band ( > ÂŁ37,501) it is very likely that your highest tax expense is income tax, anything you shave off of that is another big win.

Sometime in the past, somewhere in these posts @Richard.W and myself did a few different calculations on separate occasions with fairly basic assumptions and SIPP usually is significantly more attractive.

Except one scenario where “you earn more money in your retirement than you did while working” in that case ISA is better.

edit: when I originally said “even in SIPP” I tried to mean, if there were any exceptions to this stamp duty rule, I’d have assumed it to be in sipp/pensions

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12

If one wish to be more picky, Investment Trusts domiciled in Guernsey don’t pay Stamp Duty. (Theoretically, Channel islands aren’t part of UK, that why I mentioned “UK-domiciled”.)

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