Robinhood UK review

How we rated Robinhood’s investment features

After years of teasing and anticipation, Robinhood finally launched its much-loved investing platform to UK investors in March 2024. Overall, when trying and testing the newly-released app, there was a lot to like but it has some restrictions and limitations.

Find out about Robinhood’s limitations and features, and why we think the fees and stock choices will make it appeal to quite a specific audience.

What is Robinhood?

The company was founded in 2013 by 2 entrepreneurial friends, Baiji Bhatt and Vladimir Tenev. Robinhood quickly made waves in the US after releasing its low-cost mobile trading app in 2015.

The idea was to make the stock market more accessible to ordinary investors by offering retail investors the opportunity to invest at the lower trading costs institutional investors can access.

Robinhood became an even better-know brand following the meme stock mania and GameStop short-selling global event. In 2021, Robinhood capitalised on the surrounding buzz and interest with an initial public offering (IPO), with the shares listing on the Nasdaq stock exchange.

Robinhood fees

This is an area where Robinhood shines with top marks and can comfortably beat many of the more established best trading apps and platforms in the UK.

Investors with an interest in US stocks will be more excited than kids planning a trip to Disney World. Along with no platform fees, there’s no commission when buying or selling stocks, and there’s no foreign exchange (FX) fee charged by Robinhood.

However, it’s worth taking a peek under that green hood, because although Robinhood doesn’t charge you an FX fee, there is a 0.03% third party fee baked into the USD/GBP exchange rate offered. This is still extremely low compared to the FX fees you’d pay with the majority of other brokerages.

Because the whole Robinhood app is denominated in US dollars and all the investments are based in the US, you’ll need to convert your pounds when making a deposit. The app will show you how many dollars you’ll get for your deposit based on the current exchange rates.

Robinhood investment choice and stocks

Robinhood focuses purely on US equities and this is one of the biggest limitations with the infamous trading app. It will suit those who bleed red, white and blue and purely want US stocks. Investors looking to trade UK shares or investments from further afield will need to look elsewhere.

The lack of other asset types, particularly exchange-traded funds (ETFs) isn’t ideal, but Robinhood could still act as your one-stop-shop to invest in US stocks.

You can deposit as little as a penny, but you need at least $1 to invest in a stock or buy fractional shares.

Is Robinhood safe and legit?

Robinhood is regulated by the Financial Conduct Authority (FCA). However, one major downside with Robinhood is that it doesn’t come with FSCS protection.

An upside is that for your US investments, because Robinhood is FINRA regulated and a registered member of the Securities Investor Protection Corporation (SIPC), your US securities are protected up to the value of $500,000 (and cash up to $250,000) should Robinhood fail.

Robinhood has also bought extra insurance so that if the SIPC coverage isn’t enough, the insurance covers up to $50 million per customer in securities and $1.9 million in cash.

Also, for UK customers who enrol in Robinhood’s cash interest feature, funds are deposited with banks covered by the Federal Deposit Insurance Corporation (FDIC) deposit insurance, protecting up to $2.25 million per person (with a $250,000 limit per bank).

The fact that Robinhood is a publicly traded company in the US also offers a level of transparency. Although as always when you invest, your capital is at risk.

Robinhood account types and products

Unfortunately, Robinhood offers UK investors access only to a general investment account (GIA). This is common practice among international platforms launching in the UK and is definitely a downside compared with most UK-based share dealing platforms.

So, you’ll need to look elsewhere if you want to make the most of UK tax-efficient “wrappers” like a stocks and shares ISA for investments, a self-invested personal pension (SIPP) for your retirement, a lifetime ISA (LISA), or a junior ISA (JISA) to invest on behalf of your kids.

With a Robinhood account, you can invest as much as you like. However, you should be aware that if your stock portfolio grows, any potential gains may be subject to UK tax.

In the 2023/24 tax year, you have a capital gains tax (CGT) allowance of £6,000 – any profit over this amount could mean handing over some of those hard-won investing gains to the taxman.
Similarly, if you hold any stocks or shares that pay dividends, anything over £1,000 could also be taxed. These allowances can change each tax year, and for 2024/2025 both are halving to £3,000 and £500 respectively.

You should also brush up on US tax rules. When you sign up and submit your W-8BEN, you make a declaration that you’re not a US tax resident, so you don’t need to file a tax return there. However, dividends from US stocks will automatically be subject to a 15% withholding tax (WHT), but Robinhood will handle this on your behalf.

Robinhood ease of use

Robinhood scored fairly well in our ease of use assessment. You can only get hold of the support team through in-app messaging, after which you’re able to request a call. In the UK, you can invest using the mobile app or desktop platform.

On the UK App Store, Robinhood scores an impressive 4.8 out of 5, but this is only from around 270 reviews. However, the US version of the App Store shows a 4.2 out of 5 from over 4 million reviews.

Google Play customer reviews for Robinhood are much lower with a disappointing 2.8 out of 5 (as of March 2024). It’s surprising to see such a big discrepancy in the Robinhood app review scores between Apple and Android devices.

Trustpilot reviews for Robinhood also come in at a lowly 1.3 – classed as “bad” – from over 3,500 reviews (as of March 2024).

Robinhood tools, resources and features

Robinhood offers users plenty of free stock analysis and research to get stuck into. With the Robinhood app, you can find all sorts of useful information and tools right at your fingertips, such as:

• Advanced pricing charts
• Latest company news
• Personalised portfolio breakdown (including diversification percentages)
• Key stock stats and financials
• Analyst ratings
• Trading order types
• Stock market news
• In-depth position details
• Watchlists
• Custom stock screeners
• Learning guides and articles

The only thing missing is social features or a community forum to interact with other investors and share ideas.