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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. Losses may exceed the value of your position. You should consider whether you understand how derivatives work and whether you can afford to take the high risk of losing your money. Capital at risk.
Please check the fee structure on your broker’s website before taking any investment decision.
In this share dealing account comparative guide, we will go through the definition of share dealing, and some of the popular UK share dealing accounts to try out today. We will also look at some of the features of share dealing accounts you should look out for before selecting one for yourself.
If you’ve ever wondered, ‘What is the best UK share dealing account for beginners?’ or “What are some of the cheapest UK share dealing accounts?”, or maybe you’ve always wanted to know the share dealing accounts with more leverage, and how some of these platforms can offer low spreads while taking no commissions from their traders. We will break down everything that has to do with share dealing in the UK and give you some of our recommendations to get started.
First, we need to understand what share dealing is.
What is a Share Dealing Account?
Share dealing is simply the act of buying and selling shares. A share is a unit of ownership of a company, so if you own a share, you own a tiny piece of that company. For example, Apple has about 16.071 billion shares held by millions of people across the world. The more shares you buy, the more of the company you own.
A share dealing account is a type of account that is used to buy, sell, and hold all kinds of UK and international shares. You can open your share dealing account and invest in shares online through your desktop or mobile, thanks to the online trading brokers.
Now, let’s look at the different types of share dealing accounts so that you can determine which one is suitable for you.
The different types of share dealing accounts available in the UK
Most share dealing platforms and services provide three types of share dealing accounts. They are;
Individual Savings Account (ISA)
Individual Savings Account (or ISA) is a tax-free savings account only open to clients in the United Kingdom. You don’t have to pay interest or capital gains tax on this account. However, the government limits the amount of money you can put into this account every year. For example, the ISA maximum allowance for the 2022/2023 tax year is £20,000.
There are four significant types of ISAs:
- Cash ISA: It is just like a regular savings account, but you don’t have to pay tax on the interest your money makes.
- Stocks and shares ISA: This account allows you to make investments without paying capital gains tax or tax on your dividends.
- Innovative finance ISA (IFISA): IFISAs allow users to lend money using a peer-to-peer lending network without paying tax on their interest.
- Lifetime ISA (LISA): LISAs are for people between 18 and 40. Users can save this money towards retirement or their first home.
There are also Junior ISAs, for children below 18.
The ISA maximum allowance every tax year applies collectively to all ISAs. If you have three different ISAs, you must spread the £20,000 among them. Also, you cannot have two of the same type of ISA.
To deal with shares, you need to use a stock and share ISA, also called an Investment ISA. With an investment ISA, you can invest in shares, bonds, funds, and investment trusts. Although you don’t pay taxes on ISAs, you have to pay admin fees to the share dealing service since they have some administrative work to do with the HMRC every year. The charges vary depending on the share dealing platform, but it is usually an annual flat fee or a percentage of the value of your investments.
Self-Invested Personal Pension (SIPP)
Self-Invested Personal Pensions (or SIPPs) are like standard personal pensions. You can save, invest, and build a nice nest egg for yourself when you retire. The only difference between SIPP and a normal personal pension is that in a standard personal pension, a pension fund manager administers the pension and chooses the investments, but in a SIPP, the user has more freedom to decide how and where to place their investments.
With a SIPP, you have more flexibility. However, you can choose to hire an authorised financial adviser to help you out. With the help of the financial adviser, you can add to your investment or make other changes as you see fit.
There are two tax benefits you can get when you open a SIPP. First, you won’t pay income tax on your investment. The second is the government tax relief you receive when paying into your SIPP.
There is no limit to the amount you can add to your SIPP if you are a UK resident under 70. However, the annual allowance – the amount of money you can build up tax-free every year while benefiting from tax relief – is capped at £40,000 for most people. Also, you cannot access your SIPP until you are 55.
General Investment Account (GIA) or Share Dealing Account
A General Investment Account (GIA) or share dealing account is a simple way to invest your funds outside tax wrappers, unlike ISA and SIPP. GIA’s don’t put a limit on your investment the way ISA does, so many people use it after they have reached their ISA limit.
Also, unlike SIPPs, there are no restrictions on when you can withdraw your funds. Therefore, you can take your money out at any time. With GIA, you can invest in a wide range of investments, including shares, bonds, funds, exchange-traded funds (ETFs), and investment trusts. GIA’s do not receive tax relief like ISAs or SIPPs but are free from administrative charges.
The Fees and Charges Associated with the UK Share Dealing Accounts
You must pay different charges when opening and operating share dealing accounts in the UK. Let’s go through some of them:
There are two kinds of trading fees you will incur when trading on a share dealing account, they are spreads and commissions. You will pay spreads on share CFDs on some brokers, and other brokers will charge commissions on every share CFD. Spread is the difference between the ask & bid market price. You will only incur spreads when trading share CFDs. If your broker offers real stocks, you will only pay a commission on every share.
Some trading platforms do offer discounts on their trading fees to retail investors. eToro, for example, offers zero commission with no markup fees on stocks.
There are different types of non-trading fees that you will incur on a share dealing account, they include platform charge, inactivity fee, deposit & withdrawal fees, and stamp duty.
Platform charge is the fee you pay for using the platform to buy and sell shares and other types of investment. Some platforms charge this as a fixed fee or as a percentage-based fee.
You will also be charged when you invest money in your share dealing account. It is called a deposit fee, and the cost is taken from your investment. It is also called an entry fee. However, you will pay a withdrawal fee for moving your investment from one platform to another. It is also known as an exit fee.
In addition, you will pay an inactivity charge on some platforms when you make less than a certain number of trades within a specified period. However, most platforms don’t collect inactivity charges.
And lastly, all UK stocks come with a stamp duty of 0.5% and an extra £1 on transactions above £10,000. However, you don’t pay stamp duty on Exchange-Traded Funds (ETF).
The Pros and Cons of Using a Share Dealing Account in the UK
- Inflation hedge: Analysis of the average returns of the FTSE 100 showed that the annualised returns over the last ten years were about 7.38%, higher than the average inflation rate of the UK. Please note that past performance is not indicative of future results.
- Ease of purchase: Thanks to share-dealing services and platforms, buying shares and other investments have never been easier. You can purchase your shares in a few minutes as soon as you set up an account.
- Little capital needed: You only need small investment capital to get started.
- Loss of investment: If a company doesn’t do as well as you anticipated, the value of the share will drop, and investors will sell. If this happens, you could lose your capital.
- Emotional rollercoaster: Share prices fluctuate a lot, and investors could feel a mixture of fear and joy when this happens. Unfortunately, many people are not tough enough to handle this emotional rollercoaster.
How to Get Started with a Share Dealing Account in the UK
Now, let us go through the process of opening a share dealing account in the UK
Step 1: Open a Stock Trading Account
Before you can start share dealing, you need to select the right online broker to create your share dealing account. There are some features you should look out for before choosing a platform, like good customer service, security, and regulations.
After you have selected the right platform, you can open a stock trading account. The process of opening a stock trading account includes:
- Choosing a membership level: Some platforms offer options for different membership tiers, each with varying sets of features and charges
- Input your details: You’ll need to input your full name, email address, and national identification number. Also, you will have to upload a valid ID.
- Link your bank account: You’ll have to provide your bank details to fund or withdraw from your account.
Step 2: Fund the account
After successfully linking your bank details, you can fund your share dealing account with different payment methods. Sometimes, depending on the platform, you might have to wait 1 or 2 days for your application to be approved. After you receive approval, you can proceed to fund the account.
Some platforms require a minimum deposit before you can start trading. Deposit the amount you can afford to lose, and you’re ready to start dealing.
Step 3: Trade the Shares you want
You can go to the dashboard of any online share dealing platform and go through all their available stocks. In addition, most platforms have good search functions to find a specific stock. You can see the stock’s stats, research, and charts before buying it. Then, enter the amount you are comfortable with, check the commission fee, and if you are comfortable paying it before buying.
You can also use leveraged trading if you want. Click on “Buy” or “Sell” to open a position on any stock you want.
What are the Benefits of Share Dealing Accounts?
There are many benefits of opening a share dealing account. Here are some of them:
Single Point Access
By opening an online trading account, you have access to all stock exchanges, local and international, from anywhere you are. With just a click, you can buy stocks on the London Stock Exchange, NASDAQ, New York Stock Exchange, and others.
Faster and Cheaper Transactions
Buying shares through online platforms is faster and cheaper than buying with traditional offline brokers. In addition, the transfer of funds and collections for transactions is near-instant. Transactions are usually cheaper because you don’t have to pay commissions to a stockbroker to help you.
Greater Flexibility and Control
You can trade shares anytime on any device Your trades are not limited to your broker’s availability to place the trade. You also get personalised alerts, so you can always keep up with the market on your own time.
Better Learning Experience
With solid research and financial advice from authorised entities and personnel, buying and selling trades on your own will teach you more about the market than indirect buying through a broker. In addition, you will learn more about shares and how to do your research.
What to Look for When Choosing a Share Dealing Account
Before opening your share dealing account, you need to know your goals for the account and investment needs. If you are just starting in investment, you may want to look out for user-friendly and educational platforms for trading. If you are a bit experienced, you may want to look for platforms with opinion-based resources and fundamental and technical data.
Apart from your investment needs, there are many other factors to consider before choosing an online broker for your share dealing account. They include:
You should look for a broker that is highly authorised and regulated by the UK Financial Conduct Authority (FCA) and other regulatory bodies like CYSEC and more. You can also get an idea of the broker’s regulation by checking if some important organisations regulate it. Some of these essential organisations are:
- Securities Investor Protection Corporation (SIPC)
- Financial Industry Regulatory Authority (FINRA)
- Federal Deposit Insurance Corporation (FDIC)
Also, you need to check that the platform has good insurance in case the company fails. You should also have some guarantee for protection against fraud.
You need to research the kind of fees you will pay if you decide to go with a particular broker. We have already discussed the essential fees you may have to pay when using different brokers, so go through the broker’s website and see the ones listed there. These fees may include commission, spreads, inactivity fee, and the likes.
Fees may not matter much to some traders, but if it matters to you, ensure you do due diligence and determine what you will be paying.
What kinds of investments are available on the platform? For example, can you trade stocks, bonds, ETFs, currencies, commodities, etc., on the platform? Look for platforms that offer a wide range of options for your investment so that you can diversify if need be.
This is a crucial part of your research, and you should take a lot of time to study the platform’s security before registering with them. Here are some aspects you should consider:
- Does the platform offer two-factor authentication? Brokers with 2FA are generally more secure than others. You can only get sensitive recovery information through your email or text.
- Does the platform sell your information to advertisers? If the platform sells information to third parties, you should not register with them.
The right customer service could make a difference for new stock traders. As a newbie investor, you want to be sure a support team is available for you when you are struggling with technical difficulties.
Check if dedicated numbers are available for trade assistance and technical support and how often you can reach them. Some platforms offer 24/7 telephone assistance. Also, check if they have a comprehensive FAQ section on their website so you can find answers to some basic questions without bugging the support team.
Compare UK Share Dealing Accounts
Now that you understand the pros and cons of a share dealing account, how to get started with it, the benefits of the account, and what to look for when choosing the account, let’s look at a list of the best UK share dealing accounts.
eToro is an industry-leading and fully regulated social trading network that allows traders to trade stocks at zero commission. It offers multiple assets for trading, including shares, currency pairs, indices, commodities, and others.
eToro is a leading global trading platform and is often considered one of the best share dealing platforms for various reasons. For one, it takes zero commissions for stock trading. Also, it allows newbie investors to copy the trading pattern of other investors to get similar results. It also offers people globally the option to trade on all the major global exchanges.
How eToro Works
There are two ways to buy and sell stocks on eToro. The first way is by buying and selling the stocks directly or share dealing. The second way is by using Contracts for Difference (CFDs).
Please note that, Unlike traditional share dealing platforms, trading real stocks on eToro comes with some restrictions, for example, investors cannot move the stocks to another share dealing platform and therefore will only be allowed to close their positions on eToro trading platform. Please refer to eToro’s T&Cs.
For the purpose of this article, we will be focused on share dealing.
To buy shares on eToro, follow the steps below:
- Log in or create a new account on the platform
- Go to the Markets page, and you’ll see a list of available stocks to buy.
- Pick the stock you want to buy. You can see details about the stock like charts and stats. When ready to buy, click on “TRADE” and select “BUY”
- Ensure you select the leverage you want to use and select “Open Trade”
The maximum leverage to trade shares on eToro is up to 1:5. The minimum deposit for eToro users in the UK is 10 GBP, while the maximum deposit can be up to 1,000,000 GBP if you use a wire transfer. However, if you use debit cards or online banking, the limit is 10,000 GBP.
As for the trade size, the limit depends on a couple of factors. For example, the app will prevent the trade if you are trying to open a position above your net exposure. Also, a maximum number of units is allowed for each instrument per position. Supported payment methods on eToro include credit card, debit card, PayPal, Skrill, Neteller, and Bank Wire.
The broker provides beginner traders with a demo account, which is funded with a $100,000 virtual fund to hone their trading skills. Traders can practice trading strategies and get used to the live market experience.
On the eToro trading platform, you can trade shares, currencies, indexes, commodities, and other assets across different sectors and exchanges. You can browse stocks across the different exchanges like the London Stock Exchange (LSE), NYSE, NASDAQ and many more.
Here’s a list of exchanges you will find the stocks available on eToro
|New York Stock Exchange (NYSE)
|London Stock Exchange
|The Stock Exchange of Hong Kong Limited (HKEX)
|Frankfurt Stock Exchange
|Amsterdam, Paris, Milan, Oslo, Lisbon, Brussels
|Bolsa de Madrid
|SIX Swiss Exchange
|Nasdaq Copenhagen (OMXC)
|Nasdaq Helsinki (OMXH)
|Tadāwul (Saudi Stock Exchange)
Before you open an account on eToro and start trading, there are some essential documents you need to have:
Proof of Identity: Driver’s licence, passport, or any other government-issued ID
Proof of address: Bank statement, phone bill, credit card statement, utility bill, council tax bill, a letter from the local municipality, etc. It should contain a date no older than 3 months.
To create an account, follow these steps:
- Visit the eToro website and click on “Join Now” or ‘Trade Now.”
- Fill in the form on the next page. You will be required to input your details and all registration information.
- Read all the terms and conditions before clicking on “Sign-up.” You must follow up with a KYC (Know Your Customer) registration. KYC involves submitting your IDs and documents so that the platform can verify your identity. To do this, you’ll have to scan some of the above-mentioned documents.
- Submit your application and wait to be verified. After you are verified, you can fund your account and begin trading.
Here are some fees you will come across when you use eToro:
- Conversion fee: Between $50 and $2500 depending on the conversion
- Inactivity fee: $10 per month after 1 year of not logging into your account
- Withdrawal fee: All withdrawal requests come with a $5 fee
- Overnight fee
You can find more information about their fees on their website.
Spreads and Leverages
eToro offers low spreads and does not incur the spread as a cost when you buy or sell stocks using their platforms. Spread is the difference between the Buy and Sell price which can vary depending on market conditions. The bid/ask spread on eToro is one of the lowest in the market.
The maximum leverage you can use to trade CFD products on eToro is up to 1:30. For share dealing, retail traders can trade stocks with leverage up to 1:5, meaning you can get 5 times your trade power to trade stocks on the platforms, though this comes with additional risks.
- Free Share Dealing Accounts: You can trade stocks and ETFs on eToro at zero commission.
- Straightforward account opening process: There are no technicalities involved. You can open a share dealing account and start trading on the same day with up to 2000 euros or equivalent while your documents are being checked. .
- Social trading: Traders and investors can observe the trading patterns of other investors and mimic their methods.
- High non-trading fees: The inactivity and withdrawal fees are relatively high
eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs.
Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.
Zero commission means that no broker fee will be charged when opening or closing the position and does not apply to short or leveraged positions. Other fees apply including FX fees on non-USD deposits and withdrawals. Your capital is at risk. For more information, click here.
2. Degiro – Our Pick for International Stocks
Launched in the Netherlands in 2013, Degiro is an online discount broker that offers low cost brokerage services. The broker has extended its services to 18 European countries enabling retail traders and investors to benefit from a highly competitive commission structure. You can trade shares, ETFs, leveraged products, Bonds, and derivatives such as Options and Futures on the Degiro trading platform.
For users in the UK, Degiro is authorised and regulated by the Financial Conduct Authority (FCA). You can get both common stocks and preferred stocks on the Degiro trading platform.
Opening an account on Degiro is straightforward and fast, and you don’t need any minimum deposit. To open an account, follow these steps:
- Complete an initial registration by inputting your name, email, and username.
- Take an appropriateness test. This test consists of five questions that determine your level of knowledge and experience in investing.
- Agree to all terms and conditions
- Deposit funds into your investment account and start trading.
There is no minimum deposit required on the Degiro trading platform. You can only deposit using a manual bank transfer or instant deposit. Credit cards and Debit cards are not allowed on the platform.
There are five account types on the Degiro trading platform. They are: custody account, basic account, active account, trader account, and day trader account. Unfortunately, Degiro doesn’t offer beginners the option of starting with a demo account.
The table below shows the different Stock Exchanges Covered on the Degiro trading Platform.
|New York Stock Exchange (NYSE)
|London Stock Exchange
|The Stock Exchange of Hong Kong Limited (HKEX)
|Frankfurt Stock Exchange (Börse Frankfurt)
|Amsterdam, Paris, Milan, Oslo, Lisbon, Brussels
|Bolsa de Madrid
|SIX Swiss Exchange
|Nasdaq Copenhagen (OMXC)
|Nasdaq Helsinki (OMXH)
|Tadāwul (Saudi Stock Exchange)
|Tokyo Stock Exchange (TYO)
|Vienna Stock Exchange (Wiener Börse)
|Warsaw Stock Exchange
|Poland (Central & Eastern Europe)
|Toronto Stock Exchange
|Istanbul Stock Exchange
|Borsa Italiana S.p.A.
The trading fees on Degiro are low. Users in the UK pay £2.18 (1.75 GBP commission + 0.43 GBP handling fee per trade) on stocks. The broker also charges 2.13 GBP commission on ETFs to clients from all parts of the world, and 0.64 GBP handling fee per trade on each derivatives, options & futures. There are no inactivity, withdrawal, deposit, or account fees, and a currency conversion fee of 0.25% is charged.
Spreads and Leverages
Degiro has some of the lowest bid/ask spreads in the market. It also offers up to 1:5 leverage for retail traders to trade shares.
- Low-cost: There are no non-trading fees, and the trading fees are low.
- Well Regulated: Degiro is regulated by the Financial Conduct Authority (FCA), a top-tier regulation authority.
- Easy to use: Degiro’s web and app platforms are easy to use for newbies.
- Straightforward account opening process: Account creation is direct and fully digital.
- Lots of base currencies: Degiro has several base currencies for deposits and withdrawals
- No Credit card or Debit card allowed: It doesn’t allow the use of credit cards and debit cards for deposits
- Less Trading Options: Degiro does not have more trading options such as forex and commodities.
Why invest in the Stock Market?
Investing in the stock market is buying a particular stock with the hope that the price will rise in the future. The global stock market capitalization is $95 trillion. This is the market value of all public companies that are trading on the financial stock market. Investing in stocks allows investors to bet on the future value of a particular share, making them hold a piece of the company that owns the stock. It is mostly done for long-term purposes as the market has bad and good times. There are many reasons you might choose to invest in the stock market, either to own a piece of the company, make passive income with the dividends given, for long-term purposes or to plan for the future and many more. It’s a personal decision to make, and yours might be a combination of the listed reasons.
There are several ways you can invest in the stock market, and you can choose to use any of the trading platforms explained earlier in this article.
How Much Money do you Need to Get Started Trading Shares on the Stock Market in the UK?
The amount of money you need to start trading will depend on a lot of factors, like your financial strength, personal preference and what you want to invest in.
- Financial Strength: You need to have some money set aside for investing before you can start trading. In addition, you should have an emergency fund to protect yourself from uncertainty in the market. Even with all the right financial signals, be prepared to go in gently. Don’t put in all you have at once.
- Personal Preference: The characteristics of a particular stock might want to make you invest in it. For instance, some people might believe that renewable energy is the next big thing in the world, and that might make them invest in the stocks of companies that adopt ESG (Environmental, Social and corporate Governance) rather than oil company’s stocks. The income statement, dividends, analyst expectations, and sector risk could also influence investors’ decision about how much to invest in a particular company stock.
You can start trading with as low as 10 GBP on some broker platforms, but you may have to make use of leverage to open positions on some stocks. If you want to trade with no money, you can open a demo account on any of the platforms listed in this article. You won’t make any money trading this way, but you’ll gain a lot of important experience.
The act of buying and selling of shares is called share dealing. There are three different types of share dealing accounts, which include Individual Savings Account (ISA), Self Invested Personal Pension (SIPP), and General Investment Account (GIA).
You will incur both trading and non-trading fees on a share dealing account. Also, you can invest in real shares and also trade stock’s CFD using leverage. A leverage up to 1:5 is allowed to trade shares in the UK.
To open a trade on a share dealing account, you can get started by opening an account with a broker of your choice, fund the account, and start trading shares. A share dealing account can be funded using different payment methods such as credit card, debit card, paypal, bank wire, and many more.
There are many factors to consider when picking a broker of your choice, and they include regulations, fees, investment options, and security. And there are a lot of share dealing brokers in the UK, where you can trade and invest in shares. You can access most of the world’s stock exchanges using these platforms.
We have reviewed some of the best brokers where you can open a share dealing account in the UK.
Q & A
No, there are always fees associated with share dealing platforms, trading or non-trading fees. However, there are platforms with no non-trading fees and low trading fees, like Degiro.
The best share dealing accounts for you depends on your requirements as an investor. For example, we found that eToro is a good option if you want a lower cost share dealing account, however, there are always other options in the market depending on what you need.
The best share dealing platform for beginner traders in the UK depends on what you are looking for as a beginner trader. eToro offers low cost and zero commission on trading, and provides access to other traders’ strategies through social trading. Capital.com, on the other hand, offers a friendly interface access to educational resources for beginners. It charges zero commission on trading too.
There are a few differences between share dealing accounts and Investment Individual Savings Accounts (ISAs); share dealing accounts do not have limits, while investment ISAs have maximum allowance limits. Currently, the limit is £20,000. Investment ISAs are also tax-free, so you don’t pay capital gains tax or tax on your dividends.
The Financial Conduct Authority (FCA) views Forex and Contracts for Difference (CFDs) as high-risk products due to their complexity and the potential for significant losses. The FCA has implemented regulations to protect consumers from these risks, including rules on leverage, margin, and negative balance protection. Additionally, the FCA requires firms offering these products to provide consumers with clear and accurate information about the risks involved. Despite these regulations, investors should still be aware that Forex and CFDs carry a high level of risk and may not be suitable for everyone.