Transfer / Gifting stocks from US account to UK account

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DaveB
Posts: 7
Joined: Tue Aug 03, 2021 1:14 pm

Transfer / Gifting stocks from US account to UK account

Post by DaveB »

I (UK/US dual citizen, living in the US) am trying to gift my brother (UK citizen, living in the UK) some household name US stock I hold. I'm wondering if anyone has done this and can provide insight into their experience. In particular, what UK brokerage they transferred the stocks to (and were they any good!).

Failing that, here's the specific issue I'm running into:

I was told by Fidelity US that a direct transfer of shares from myself to my brother was not possible, and that the work around is:
  1. Create a joint account with my brother at Fidelity US (not difficult - seems the IRS is happy as long as there's someone with an SSN first on the account)
  2. I transfer the shares from my US brokerage account into the joint US account
  3. My brother transfers the shares from the joint US account to his UK brokerage account
[Works because the person doing each transfer is named on both accounts.]

My brother doesn't have a UK account yet, so we needed to set him up with one. When talking to the Fidelity US adviser, I suggested Fidelity UK. The adviser said it didn't have to be Fidelity UK, and wanted to make clear Fidelity US and UK are completely separate companies, and the conversation moved on to him needing register a W8-BEN with his new UK account.

Thing is, when my brother went to set up an account with Fidelity UK, they told him they only trade in UK markets and he can't buy / sell / hold US stocks with them. I couldn't believe that at first, but have since independently verified.

This has understandably damaged my brother's trust in my guidance (and by proxy, to the related tax advice I passed on from my UK/US tax accountant (we're doing the 'UK-US gift stock rather than cash to avoid capital gains' thing)) so I'm hoping someone on this group has experience of transferring/gifting stock internationally, or at least can recommend a UK broker that isn't gong to make me look stupid in round #2 :happy

FYI, my brother's been talking to Hargreaves Lansdown (biggest broker in the UK, expensive, good customer service, I've never heard of them). He says they say an intermediate service is required, but then the acronym soup started and I'm not sure enough of what they said to him to want to repeat it here 3rd hand. Any idea what this may be about?

[12/3 Update]
I waited up til midnight my time and called Hargreaves Lansdown (HL) myself when their lines opened at 8am. The intermediate service was just them describing the usual DTCC/ACATS stuff and not actually a concern, so I've crossed it out above.

However, HL also confirmed they won't allow step 3. Specifically, they'll only accept an external transfer from an account that has the same holders on it - i.e. individual-to-individual or joint-to-joint, not joint-to-individual. I asked if that was a legal restriction or a HL thing. It's a HL thing, so I tried iWeb, but they have the same restriction. I'd try Interactive Brokers, but their whole approach is no support so I can't just phone someone up and ask.

So I've gone back to my UK/US tax guy to find out if this change matters. It doesn't change my overall post though (asking for other's experiences and what UK broker they used), so I've left it up.
Last edited by DaveB on Fri Dec 03, 2021 3:57 am, edited 2 times in total.
Valuethinker
Posts: 49027
Joined: Fri May 11, 2007 11:07 am

Re: Transfer / Gifting stocks from US account to UK account

Post by Valuethinker »

DaveB wrote: Thu Dec 02, 2021 6:39 pm I (UK/US dual citizen, living in the US) am trying to gift my brother (UK citizen, living in the UK) some household name US stock I hold. I'm wondering if anyone has done this and can provide insight into their experience. In particular, what UK brokerage they transferred the stocks to (and were they any good!).

Failing that, here's the specific issue I'm running into:

I was told by Fidelity US that a direct transfer of shares from myself to my brother was not possible, and that the work around is:
  1. Create a joint account with my brother at Fidelity US (not difficult - seems the IRS is happy as long as there's someone with an SSN first on the account)
  2. I transfer the shares from my US brokerage account into the joint US account
  3. My brother transfers the shares from the joint US account to his UK brokerage account
[Works because the person doing each transfer is named on both accounts.]

My brother doesn't have a UK account yet, so we needed to set him up with one. When talking to the Fidelity US adviser, I suggested Fidelity UK. The adviser said it didn't have to be Fidelity UK, and wanted to make clear Fidelity US and UK are completely separate companies, and the conversation moved on to him needing register a W8-BEN with his new UK account.

Thing is, when my brother went to set up an account with Fidelity UK, they told him they only trade in UK markets and he can't buy / sell / hold US stocks with them. I couldn't believe that at first, but have since independently verified.

You need a different sort of account to trade non London Stock Exchange listed stocks. IB (Interactive Brokers?) has one I believe.

Since there are plenty of ETFs available to UK investors that cover foreign markets, I have never felt the need to trade foreign stocks.
This has understandably damaged my brother's trust in my guidance (and by proxy, to the related tax advice I passed on from my UK/US tax accountant (we're doing the 'UK-US gift stock rather than cash to avoid capital gains' thing)) so I'm hoping someone on this group has experience of transferring/gifting stock internationally, or at least can recommend a UK broker that isn't gong to make me look stupid in round #2 :happy

FYI, my brother's been talking to Hargreaves Lansdown (biggest broker in the UK, expensive, good customer service, I've never heard of them). He says they say an intermediate service is required, but then the acronym soup started and I'm not sure enough of what they said to him to want to repeat it here 3rd hand. Any idea what this may be about?

Hargreaves Lansdown is well known for high fees for funds. They make a good living pedalling the current top performing funds to investors. That led them to make an awful lot of commission selling Neil Woolford's funds - investors subsequently lost huge amounts.
halfnine
Posts: 2421
Joined: Tue Dec 21, 2010 12:48 pm

Re: Transfer / Gifting stocks from US account to UK account

Post by halfnine »

Try Schwab (https://www.schwab.co.uk/). If your brother sets up an account with them it might solve both transferring stocks to him and him having a brokerage.
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