Investing in US stocks from the UK

Everything is bigger across the pond, and US stocks make up close to 60% of the global stock market. Buying US shares is a fantastic chance to diversify your portfolio and invest in some of the world’s biggest and best companies. But, if you’re in the UK, how do you invest in US stocks?

How to invest in US stocks

1. Choose a share dealing platform. If you’re a beginner, our table below can help you choose.
2. Open your account. You’ll need your ID, bank details and national insurance number when opening a share dealing account.
3. Complete your W-8BEN. You’ll need to fill out a W-8BEN form to confirm you’re not a US tax resident. Most platforms and apps let you do this online.
4. Confirm your payment details. You’ll need to fund your account with a bank transfer, debit card or credit card.
5. Find the US stocks you want to buy. Search using the stock code or company name.
6. Buy US stocks. Simply click “Buy” to finish your order. Unless you’ve deposited dollars, you’ll likely have to pay a small foreign exchange (FX) fee.

You can invest in US stocks using a number of trading apps. Each will give you different levels of access to the US stock market, along with various trading options and features.

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Can I trade US stocks in the UK?

Yes, you just need an investing account that lets you trade US stocks. We’ve listed some of these below with links to our reviews – check these out to find one that suits you.

There are some extra things you need to take into consideration when investing in US stocks, including the fees involved and whether you need to fill out a W-8BEN form.

How much does it cost to invest in US stocks?

There are 2 key fees you need to consider when trading US stocks:

1. Commissions. The commission is the cost that a platform charges you to make a trade. Some platforms have no commissions.
2. Foreign exchange (FX) fees. The FX fee is the cost the provider charges you to change your money to US dollars. This is usually shown as a percentage and most are under 1%.

There may be other fees you need to consider, but these are the primary ones. Our table below of UK brokers that let you trade US stocks shows the commission fee for a US trade and the FX fee for key providers.

Why invest in US stocks?

Over the last decade, leading US stock indices (like the S&P 500 index and the Nasdaq 100 have given investors much higher returns compared to those in the UK (like the FTSE 100). Mostly, because of the rise of tech stocks – thanks Zuckerberg, Musk, and Bezos. Investors that were only invested in UK or European stocks may have missed out on these big, tech-driven gains.

Of course, past performance is no guarantee of future results. You may not make huge gains by investing in these stocks today. But holding US stocks means adding a layer of international diversification – owning pieces of the most recognisable companies in the world.

A couple of decades ago, it was difficult (and costly) to invest in US stocks. These days, many of the best trading apps and platforms offer low-cost access to international markets – including the US stock market. Did someone say yeehaw?

How do US stocks perform?

The best way to understand past performance of US stocks is to take a look at the 2 major US stock exchanges: the Nasdaq and the NYSE.

• NASDAQ
• NYSE

What to keep in mind when trading US stocks

• Commission costs. Compare the fee each company charges every time you place a trade on US stocks. Be aware that this may be different to fees for UK stocks.
• Foreign exchange (FX) rate. FX rates vary between platforms, and this will partly be used to offset low broker fees. Make sure to check these, it’s usually shown as a percentage.
• Availability of market data. Check how up-to-date the market data offered by each platform is – being able to make trades based on current information (and ideally live prices) is critical.
• Trading types and hours. Are trading order types available to let you take advantage of market fluctuations? Can you trade outside US stock market hours?
• Taxation. If you’re holding your US investments in a stocks and shares ISA, you can avoid paying UK tax on any profit or dividends. However, not all trading platforms offer the option to use an ISA.
• W-8BEN form. You need to fill out a W-8BEN form when trading US stocks to determine your tax status. Some brokers let you do this electronically while a small few ask you to return one by mail.

Advantages of investing in US stocks

Here are some of the key benefits as an investor:

• Access international investments. Trading US stocks allows you the freedom to take advantage of investment opportunities that are not available in the UK, helping you to diversify.
• Increasingly more affordable. As a growing number of online share trading platforms compete, commission fees are becoming cheaper.
• Historical growth. The US stock market has seen more growth than the rest of the world in the past 100 years.
• Exciting companies. The US stock market is home to some of the most exciting and innovative companies the world has ever seen.

Risks of investing in US shares

There are also some potential downsides to think about:

• Commission fees. You’ll need to contend with potentially higher commissions when you buy US stocks or other international shares.
• Exchange rates. The USD-GBP rate fluctuates frequently which might negatively impact your investment.
• Additional fees. International trades are sometimes subject to fees that UK-only trades are not, such as foreign exchange (FX) fees.
• Valuations. For a long time now, US stocks have been trading at high valuations compared to companies in other countries.
• Platforms. Not all UK share trading accounts will let you access US stock exchanges.

Expert comment - What are the best US stocks to buy?

George Sweeney

Deputy editor

There's no one-size-fits-all answer to this. The best US stocks for you to invest in will depend on the rest of your portfolio, your risk tolerance and your investing strategy. One thing to keep in mind with US stocks (or any stock for that matter) is that what's performed well in the past rarely keep on winning forever. For example, the top US stocks from 30 years ago look very different to the top stocks today. So, what will the top US stocks look like in 30 years time? It's impossible to predict.

One way to combat this uncertainty is by investing in an index fund or ETF that tracks the whole US stock market, or just a big portion of it like the S&P 500 does. Using a tracker fund rather than picking individual stocks means that you don't have to worry about choosing the winners of tomorrow, you can automatically invest in them with a diversified fund.

Pros and cons of investing in US shares

Bottom line

Choosing to invest in US stocks can be a great way to get access to rising tech stocks and other prominent American companies to diversify your portfolio. It’s a popular market for investors, but if you want to buy US shares from the UK, you need to make sure you’re aware of all the costs (like commissions and FX fees).

It can be worth working out how much it will cost before buying US stocks. And crucially, you need to make sure you choose a platform or app that lets you access US stock exchanges. Diversifying internationally is a great strategy, just make sure that any US stocks you pick align with your goals and risk appetite.

• Do you pay tax on US stocks in the UK?

  You’ll be taxed 30% of your profits, but you can reduce this. When you sign up for a share dealing account that lets you trade US shares, you’ll be asked to fill out a W-8BEN form. This notifies the US of your tax status and reduces the amount of tax you have to pay to 15%.

• Do I still have to pay capital gains tax in the UK if I invest in US stocks?

  Everyone has a capital gains tax allowance of £3,000 in each tax year, so you’d be liable to pay capital gains tax if you earn over this amount in profit in any given year.

  An exception to this is if you sell shares that are held in an individual savings account (ISA). You can put up to £20,000 into your ISA in each tax year.

• Is it worth investing in US stocks?

  The US stock market accounts for 55.9% of the global stock market, so you’d be missing out on a huge chunk of available stocks if you were to avoid US stocks. Furthermore, some of the largest stocks in the world are US stocks, including Apple, Microsoft and Amazon.

• How can I buy US IPO stocks from the UK?

  Initial public offerings are usually difficult to access as a retail investor. Once the IPO has finalised, check in on your chosen trading app to see if you can trade it – it doesn’t tend to take long.

• Is it better to invest in UK or US stocks?

  It’s important to diversify – which is the stock market version of not sticking all of your eggs in one basket. Invest in different countries, industries and types of investment. This means that you’re more protected if one economy has a downfall.

• Can I invest in the NYSE from the UK?

  You can indeed invest in stocks on the New York Stock Exchange from the UK. We’ve written a whole guide on NYSE if you want to learn more.

Written by

George Sweeney, DipFA

Deputy editor

George is a deputy editor at Finder. He has previously written for The Motley Fool UK, Nasdaq, Freetrade, Investing in the Web, MoneyMagpie, Online Mortgage Advisor, Wealth, and Compare Forex Brokers. He's focused on making personal finance and investing engaging for everyone. To do this he draws from previous work and his Level 4 Diploma for Financial Advisers (DipFA), sharing what he’s learnt. When he’s not geeking out about money, you’ll find him playing sports and staying active. See full bio

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