Compare share dealing accounts

If you’ve decided to start investing, then it’s time to compare share dealing accounts. Whether you’re an experienced trader or a beginner, you’ll want a share dealing account that gives you access to the markets you’re considering, and offers the best value for money. Fees, tools, charts and safeguards differ, so we set out what you get and the costs.

The table shows the price per trade, the frequent trader rate, which is the rate that you’ll get if you trade often, and any platform fees. When you’ve chosen, hit “Go to site” to get started.

What’s a share trading account?

Before you can start to compare share dealing accounts, it’s important to know what it is and how it works.

A share trading account (also known as a brokerage account and a share dealing account) lets you buy and sell company shares. They sometimes also give you access to exchange-traded funds (ETFs) and other fund types. Accounts differ in the range of shares you can trade on them, so if you’re keen on owning a bit of Apple, for example, you’ll need a broker that lets you trade US shares. You can find out which accounts offer which types of shares in the provider details in our table, above, and also in provider reviews. It’s worth considering opening a stocks and shares individual savings account (ISA) to “hold” your investments because you can invest up to £20,000 a year in ISAs and you won’t have to pay tax on the profits. But you might have to pay a fee for the ISA, depending on the platform you use.

What are the different types of trading account?

There are several types – each with pros and cons.

• The big, established players tend to offer a comprehensive service but with higher fees; examples are Hargreaves Lansdown and IG.
• Then there’s a breed of zero or low-commission accounts, which tend to be from challenger brands, and via an app or online. These include eToro and Trading 212 and Freetrade.
• Thirdly, there are robo-advisers. These are platforms and apps that invest for you in ready-made portfolios. They’re aimed at helping you diversify your investments at a low cost. You typically can’t choose specific investments to make up a portfolio with these. They’re popular with beginners. Examples are Moneyfarm, Moneybox and Nutmeg.

How do I choose a share-trading platform?

1. Establish how often and how much you’ll trade. How regularly do you plan to buy and sell shares, and how much do you want to spend on shares? This will determine the type of access you might want, as well as what you’re charged.
2. Compare fees. Different providers have different fee structures, such as lower fees if you trade more often. More on this below and in our guide to investment fees.
3. Tools and other features. Consider the trading features and tools, such as Stop Loss, that can help you minimise risk.
4. Range and type of stocks and funds offered. If you want access to international stocks, you’ll need to check that a provider offers them.

After you’ve set up an account, you’ll be able to browse shares to buy. You can select shares based on quantity, or based on value. Once you’ve bought your shares, they will appear in your portfolio.

What are the costs of share trading?

One of the most important parts of comparing share dealing accounts is comparing their fees.

Share dealing platforms make money through various fees and charges when you buy shares. Here’s a list of typical ones:

• Account fee. This charge can be monthly or annually.
• Inactivity fee. Some platforms charge you if you stop trading, but this is a decreasing trend as providers compete for customers.
• Price per trade. The more often you trade, the more likely you’ll get a discount on this.
• Stamp duty reserve tax (SDRT). UK shares traded electronically incur 0.5% SDRT.

Why it’s important to compare fees

Trading fees can quickly add up and eat into profits. So it’s important to know upfront what you’re likely to be charged for so you can maximise any returns. Here are two examples of charges, based on real platforms, for someone who makes 12 trades a month.

Free? What’s the catch?

Finder’s investment expert Zoe Stabler answers

A platform which boasts zero commission might seem like a free lunch, but of course these platforms make money in other ways.

While adding money to your trading account is typically free, withdrawing it can cost $5 (about £3.60) on some platforms. Trading in another currency, such as for foreign shares, can incur a currency conversion fee of anything from 0.1% to 1.5% of the amount you convert for each trade.

You might also encounter “inactivity fees” – which can sting the most. These are where a provider charges you for having money in your account when you haven’t traded for a while (anything from a few months to two years). Inactivity fees can work on a rolling month-by-month basis at around £10 each month, or can be a set fee of up to £100.

Many of the providers we’ve reviewed have a “freemium” model – you get basic access and a certain number of trades for free, but there’s a charge for upgrading to more features, like access to research and better charting tools, and more trades each month.

Typically platforms that offer zero commission also offer riskier investment options, so are not always the best choice for a beginner.

Two in three people (67%) in our poll were planning to buy stocks and shares

Finder survey of 2,000 people, May 2020

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How to compare share dealing accounts

Share dealing accounts aren’t really comparable — think of it like choosing a dessert. Not every dessert behind the counter is the same — you might fancy a tiramisu, while you might have a friend who swears that the lemon tart is the best one, it’s really all about what you want. With trading apps, it’s more about finding the one that has the specific features that you’re looking for.

To compare share dealing accounts:

1. First look at the stocks the platform trades. There’s no point looking further at a platform if it doesn’t trade the stocks you want. Some providers only trade UK stocks, while others have a huge range of overseas stocks.
2. Look at the types of investments offered. Similar to the first step, check that the providers have all the investment types that you want, such as funds and commodities.
3. Next, look at the features. Some providers, typically the more expensive ones, will have a huge array of features available. While this is great, it’s only worth paying for if you actually plan to use them all. Figure out what you’ll use and what you won’t. You can always change providers later if you need more features.
4. Take a look at which ones are mobile only. Several apps might not have mobile apps at all. Decide which you’d prefer.
5. Compare the fees. You’ll want to compare the commission and foreign exchange fees. Check if there are any platform fees as well.

Risks to consider

Investing comes with risk. The value of the shares you buy could go down for many reasons, such as some negative press, the company releasing less than expected earnings or, as in the case in 2020, a pandemic. You need to ensure that you’re not investing money that you can’t afford to lose and that you take risks that you are comfortable with.

Stocks and shares are a riskier investment to government bonds or cash savings. Do your research into a company. If you’re starting out, consider avoiding newly-floated stocks if there’s not enough information on them to make a decision and avoid over-the-counter (OTC) stocks that aren’t on a major stock exchange.

Frequently asked questions

• Do I get taxed on trading shares?

  Yes. You could have to pay capital gains tax and 0.5% stamp duty. But if you use a stocks and shares individual savings account (ISA), it’s tax free. More on this from the government site.

• How can I deal shares cheaply?

  The best way is to be a frequent trader. Specific frequent trader accounts often come with reduced costs per trade.

• Can I transfer shares from one platform to a different one?

  Yes, but you’ll be charged to this.

• Can I buy shares in any company?

  No. Only in those companies you find listed on stock exchanges.

• Can I trade shares using an app?

  Yes, providing the platform you use offers a mobile app. You will still need to set up an account and provide payment before using the app.

• Are share dealing costs tax deductible?

  Yes, mostly. You can deduct stock broker fees and any stamp duty reserve tax that you paid when you bought the shares.

• Can share trading make you rich?

  Isn’t this the million dollar question (hopefully!). The truth is, that while it’s certainly made some people rich, the chances are, you won’t suddenly find yourself with £1 million from a tiny £20 investment. It’s a good chance to get a better exchange rate on your savings than you can get with a savings account, though.