Compare share dealing accounts

Whether you’re an experienced trader or a beginner, you’ll want a share dealing account that lets you access the markets you want and offers the best value for money. We’ll explain what you get, and the costs of each one.

What’s a share dealing account?

This is a platform that lets you buy and sell investments like stocks and shares, for example. Sometimes you can also trade other assets, it depends on the platform you pick.

A share dealing account is also known as a “brokerage account”, “share dealing platform” or a “share trading account”. It all refers to the same thing – a place where you can buy, sell, or hold investments.

It’s worth considering opening a stocks and shares ISA with your chosen share dealing account provider 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 most profits. But you might have to pay a fee for the ISA, depending on the share dealing platform you use.

What are the different types of share dealing account?

There are several types of share dealing platforms – each with pros and cons.

• Established brokers. The big, established players tend to offer a comprehensive service but with higher fees; examples are Hargreaves Lansdown, IG, and interactive investor.
• Low-commission platforms. Then, there’s a breed of zero (or low-commission) share dealing accounts, which tend to be from challenger brands, and you access them via an app or online. These include eToro, Trading 212, Freetrade, CMC Invest and Lightyear.
• Robo-advisors. Lastly, there are robo-advisors. These platforms and apps invest for you in ready-made portfolios. They’re aimed at helping you diversify your investments at a low cost. Typically, you can’t choose specific investments to make up a portfolio. They’re popular with beginners. Examples are Wealthify, Moneyfarm, Moneybox and Nutmeg.

How do I choose a share dealing account?

1. DIY or robo-advisor. Think about whether you want to be in charge of picking and managing your investments, or if you’d prefer to pay a small fee to have experts handle everything.
2. Compare fees. Fee structures differ depending on the account. For example, there may be lower costs if you buy or sell investments more often. More on this below and in our guide to investment fees.
3. Tools and other features. Consider the features and tools available to you, such trading order types, that can help you minimise risk.
4. Type of investments on offer. You might not need to access every stock exchange in the world, but if you want to buy international stocks, you’ll need a share dealing account that offers them.

After you’ve set up a share dealing 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’ll appear in your portfolio.

What are the costs of share dealing?

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

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

• Account or platform fee. This charge can be monthly or annually. With some platforms this will be a flat fee (no matter the size of your portfolio), but others will charge you a percentage amount based on the size of your holdings.
• FX fee. If you buy international stocks, most platforms charge a foreign exchange (FX) fee.
• Inactivity fee. Some share dealing account platforms charge you if you stop trading, but this is a decreasing trend as account providers compete for customers.
• Price per trade (commission). 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, allowing you to maximise any returns. You may have already heard about how your gains can compound over time, well, you’re probably less likely to have heard about how your costs can also compound. Spread out over many years, small fractions can make a huge difference.

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

Comparing share dealing accounts as an “apple to apples” comparison is difficult — it’s really all about what you want. With trading apps, it’s more about finding the one that suits your needs and comes with the features you’re looking for.

How to compare share dealing accounts:

1. Check out the available stocks. There’s no point looking further at a platform if you can’t trade the stocks you want. Some accounts only trade UK shares, while others have a huge range of overseas stocks.
2. Look at the investment types. Similar to the first step, check which share dealing accounts have all the investment types or assets that you want, such as funds and commodities.
3. Review the features. Some share dealing accounts, 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. Figure out what you’ll use and what you won’t. You can always swap to a new share dealing account later if you need more features.
4. Think about app-based trading. Several share dealing accounts don’t have mobile apps at all (I know!) and some are completely app-based. Decide which you’d prefer.
5. Compare the fees. You’ll want to compare the commission and foreign exchange (FX) fees. Also check what the other platform fees involve.

Risks to consider when choosing a share dealing account

Investing comes with risk. The value of shares or investments you buy could go down for as many reasons as it could go up. You need to ensure that you’re not investing money that you can’t afford to lose, and only take risks that you’re comfortable with.

When you begin comparing share dealing account, if you’re new to investing – it might be best to avoid complex or expensive platforms. You can always upgrade to a more detailed brokerage service once you’re comfortable and learn the ropes. Keep in mind that the best trading app for you will likely be different from someone else’s ideal platform.

Bottom line

If you want to start investing, you’ll need a share dealing account. These days, there are plenty of options to choose from and it’s all about find the right one for your needs, which is where we want to help.

As you find your feet, just keep things simple. Don’t get bogged down in all the details about the nuts and bolts of platforms. Look for one that suits how you want to invest, and if you need some inspiration, check out our best trading apps. We’ve tested and analysed UK share dealing accounts to give you our verdict on the top options.

Frequently asked questions

• Do I get taxed on trading shares with a share dealing account?

  Yes. You may have to pay tax. But if you use a stocks and shares ISA, you can avoid capital gains and dividend tax.

• How can I deal shares cheaply?

  The best way is to be a regular trader or use a 0% commission platform. Some platforms offers discounts to regular investors and other platforms don’t charge any commission to begin with.

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

  Yes, but you may be charged to do this, it’s best to check with your current platform.

• 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 account 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. As ever, tax will depend on your individual circumstances.

• 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 that 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.