If you invest in U.S. company stocks, a 15% withholding tax is automatically deducted from your dividend payments before the money reaches your account. This is due to a tax treaty between the U.S. and the UK/EU and is handled for you—no additional action is needed.
Plum does not handle tax reporting or payments on your behalf. You're responsible for declaring your investment income on your local tax return if applicable. In case you need assistance or you have specific questions about your stock account, you should contact a certified financial advisor or accountant, as Plum is not in a position to provide further details.
Taxation in the United Kingdom
If you're a UK tax resident, the following allowances apply (as of the 2024/25 tax year):
Dividend Allowance: You can earn up to £500 per tax year in dividend income without paying tax.
Capital Gains Tax (CGT) Allowance: You can make up to £3,000 in profit from selling shares each tax year without paying CGT.
If your earnings exceed these allowances:
Dividend tax rates range from 8.75% to 39.35%, depending on your income tax band.
Capital Gains Tax is typically 10% or 20%, depending on your total taxable income and the size of the gain.
These thresholds are subject to change by HMRC and may be updated each tax year. Always check with a tax adviser or the official UK Government website for the latest information.
Taxation in the European Union
For customers in the EU, the taxation of investment income (dividends and capital gains) varies by country. Each member state has its own tax rules and thresholds. Some common points:
You may need to declare dividends and gains on your annual tax return.
Local tax rates and allowances will apply to both dividends and capital gains.
Double-taxation treaties with the U.S. often reduce the withholding tax on dividends from 30% to 15%, as is the case with most EU countries.
We recommend checking with your local tax authority or consulting a tax advisor to understand how your investments are taxed in your country.