Highlight Amendments to Legal Documents

Could you please highlight Amendments to Legal Documents?

You just refer to the files and pages, but none have bolded texts or summary to point to the new changes.

Thanks!

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Can someone provide a tl;dr version for lazy people like me? Is there anything to worry about?

The email:

With the following written notice, we would like to bring to your attention that Trading 212 UK Ltd. will apply some amendments to its legal documents.

Along with the updated documents, you can find an overview of the upcoming changes below:

  • The new version of the Share Dealing Terms of Business can be found here and an overview of the amendments can be found here. *
  • The new version of the Risk Disclosure Notice can be found here and an overview of the amendments can be found here.

Should any questions arise, feel free to contact us.

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What does this amendments will mean in real life? I mean, operationally. Thoughts?

A summary here: Trading 212 Just Killed Dividend Investing & Other T&C Updates (New Accounts Open Soon?) - YouTube

Hold on a minute…
You lend out my shares and the hedgefund or whoever get my voting rights as well??? (Not that T212 have ever ever given me the option to cast my vote)

So you are basically a hedfunds wet dream

22.10. With respect to shares lent, voting rights will be held by the Borrower, although the Borrower will be required to account for the benefit of corporate actions such as rights or bonus issues. This means that You may not be able to exercise all voting rights related to any shares lent. You will receive any other rights and distributions made on loaned shares.

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That’s pretty standard for lent equity to be fair. I’d be surprised if it was any other way.

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Standard practice, nothing new.

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That YouTube summary is mostly factually incorrect @W.H

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Your tax understanding for the UK to my knowledge is incorrect, the treatment in the UK for a manufactured dividend/Interest payment, would be treated the same as if you directly received the dividend/interest.

Your comment at 3:22 I believe is incorrect as contradicts standard UK accounting practices, so I had to look up HMRC to double check the advice. National Insurance does not come into play, and the Dividend/Interest is treated as if you received it directly, so can still utilise the £2000 allowance.

Taken from HMRC

Income tax: the recipient of a manufactured payment will be treated as receiving the real dividend or interest of which the payment is representative.

Their wording is probably purely down to the fact they work in multiple jurisdictions, and that they as our service provider do not provide ‘tax advice’, so the wording is wooly, but UK law still applies to UK investors in relation to tax treatment.

Welcome to the forum btw!

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Agree, this is not helpful from 212 for completing tax returns. It should probably state to effect “Return of Capital in relation to dividend/Interest event X” - so it is clear for the end user how to treat for tax purposes on their tax return.

I am saying the standard tax treatment implies. Your video says otherwise. Basically they have not killed dividend investing as suggested. You would get the same dividend treatment for tax purposes as if you held the security with any other broker that did not lend out your stock.

Taken from HMRC

The legislation dealing with manufactured payments aims to treat the manufactured payment in the hands of the recipient and payer in broadly the same way as if it were a real dividend or real interest

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It depends what the hedge fund does with the shares. Mostly share-lending is done to facilitate short-selling. Suppose hedge fund H wants to short a stock that you own. Your shares are lent to hedge fund H, who sells them in the market to B, who could be anyone, including some other private investor. It is B that now has the voting rights and receives the dividends, not H. In this case, B has the same interests as you, wanting the price to rise.

The danger is that H might borrow the shares, not to sell them short, but to exercise the voting rights, perhaps in favour of decisions that will make the value of the shares drop.

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Yes they do… I dont know what to say

The T&C haven’t really changed that much at all, there should not be any difference financially to the user, they’ve just made them a bit clearer the service provided. The only way to ‘opt out’ is to leave.

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Received amount of “return of capital” will be gross or net? If gross, it’s fine. If net, then we need tax withholding statement from T212 same as for dividends. Otherwise there will be double taxation.

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LOL, why you flag the message? This is TRUE in my country. Not everybody lives in UK. It was @Dougal1984 I bet :wink:

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@Dougal1984 :handshake:

I just want to know if you receive the gross amount in this case or not.

Treatment will differ depending on the type of event, your tax location and where the company is based. Guess its just not always clear on the 212 statement!

For example Microsoft. Tax is 15% with W8BEN.
I receive dividends with 15% withhold tax (net).
I must declare confirmation from broker that tax was paid. In this case my tax on income is 0. If I have no confirmation from broker I have to pay 15% from already taxed net amount.

If I receive gross amount I have to pay 15% by myself.

What will be the same situation with borrowed Microsoft stock?

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The situation with lent stock is the same as with unlent stock, and your taxes and withholding tax position will be identical.

But I don’t think you will ever know if your stock is lent.

Suppose clients of Trading 212 own in aggregate 1,000,000 MSFT shares. If 50,000 of these are lent out through the Interactive Brokers “stock yield enrichment program” it will not be that some identifiable 50,000 shares, beneficially owned by certain clients of Trading 212, are the ones lent out. All that will happen is that Trading 212 will share with IBKR fee income derived from the lending, and on the dividend payment date Trading 212 will receive from IBKR exactly the same sum of money to pass on to its clients as it would have received if that portion of stock had not been lent out, net of the same withholding tax that W8-BEN of the beneficial owners determine should be deducted.

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