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Across the world, the stock market has become an increasingly popular form of investment. Many more UK traders now find they have access to stockbrokers who provide a digital interface which allows them to trade entirely online. As an investor, you will also benefit from the protection of the Financial Conduct Authority (FCA), which is recognised globally as one of the most stringent licensing authorities.

The London Stock Exchange (LSE) is the primary target for most UK stockbrokers. However, there are certainly opportunities to diversify to European, US or Asian markets if that is your preference. UK stockbrokers come in a variety of shapes and sizes, all offering various opportunities as well as different types of account. All you need to do is to find the one that is closest matched to your idea of perfect.

Finding the right stockbroker is not a five-minute task, it takes time, patience and a good deal of research, but if you feel daunted by the prospect, then we can help you out. Please take the time to browse through our carefully curated broker reviews; they provide straightforward reading, designed to cover all of the most important aspects of stock trading. What is more, you have our assurance that any broker we recommend is a top-tier operation on every level.

In this article, you will learn:

  • How the UK licences and regulates stockbrokers
  • The impact of fees and taxes for stock traders
  • Tips for choosing a stockbroker to suit your needs

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Risk Warning / Ad Disclosure

Risk Warning: The products offered by the companies listed on this website carry a high level of risk and can result in the loss of all your funds. You should never risk money that you cannot afford to lose.

Ad Disclosure: Some of the links that you will find on this website are advertisements for which we do receive financial gain for referring new customers.

Traders in The UK

UK

Stock trading in the UK has become much more commonplace in the last decade thanks to considerable advances in technology, mobile devices and more reliable ways to access the Internet. The world is now your oyster and all you need to do is find a stockbroker to start trading. In the meantime, here are a few things for you to consider:

Mobile Trading

It has increasingly become the norm to live life on the move using the array of mobile opportunities that are available to the majority of UK adults and stock trading has joined that list. If you plan to trade on the go, then it is essential to seek out the brokers with the most advanced mobile apps. There is still a level of disparity between trading apps, so it is well worth investigating which brokers are providing the functionality you need.

Deals And Incentives

The FCA forbids incentive-based advertising, but that does not mean that stockbrokers have not devised other ways to reward loyal clients. These can take many different forms, including loyalty or volume rewards, reduced fees, account upgrades and free use of analytics software. As each broker is different, please take a look at our reviews for an overview of this subject.

Diverse Asset Types

The focal point of UK stockbrokers is inevitably the London Stock Exchange (LSE) and you will find that the majority will offer better deals for stocks available from that source. If you are happy sticking to investing in your 'home soil' then that is fine, but if you want to get involved with more global markets, then it may take a little bit more research to find a broker who offers more diversity.

Good Customer Support

Try not to think of customer support as just somewhere you go to complain or to deal with a dilemma. Support starts from the time you sign up with your new broker, helping you with any registration, platform or funding questions and providing education for new and experienced brokers. An accessible service which has a 'real' person answering the phone or responding knowledgeably to queries on a live chat facility is a must at certain times.

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Broker Fees And Tax

Stockbrokers all work differently and the ways they charge clients can be very different as well. You will also find that there is a variety of account options available, varying from commission-free to 'full-service'. Regardless of the description the broker uses, it is a business after all, which must cover its costs and show a profit.

A commission-free brokerage will still charge various fees for the services it provides to clients. Fees charged include administration, currency exchange, deposit/withdrawal and software subscriptions. A full-service broker charges an all-inclusive fee, calculated as a percentage of your total investment; this usually equates to about 10%, payable monthly or quarterly.

In the UK, there are two taxes applicable to stock trading, Capital Gains Tax and Income Tax; HMRC (Her Majesty's Revenue and Customs) administrates both. Your liability is dependent on whether you are classed as an 'investor' or a 'trader', based on the profit made over and above the tax-free threshold. Tax is a complex subject in the UK and we recommend that you keep accurate accounts related to your trading activities and consult an accountant if you have any doubts.

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British Licencing

The world-renowned Financial Conduct Authority (FCA) is the UK's licensing and regulatory body for all matters financial. It was established in 2013 following the Financial Services Act (2012) and replaced the Financial Services Authority (FSA).

The FCA has a robust regulatory framework and works towards these operational objectives:

  • To secure an appropriate degree of protection for consumers
  • To enhance market integrity and protect the UK financial system
  • To promote competition in the interests of consumers

There are many excellent UK-regulated stockbrokers to choose from and for the average trader, no good reason to look beyond them. However, it is understandable that some more experienced traders may opt for an offshore brokerage, due to the potential for tax savings. However, before you head in that direction, please be aware that some overseas licensing authorities offer little protection for investors under their jurisdiction.

We primarily recommend UK-based brokers who hold an FCA license and can demonstrate that they have conformed to regulations and shown financial stability over some time.

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How we Recommend Brokers

We primarily recommend UK-based brokers who hold an FCA license and can demonstrate that they have conformed to regulations and shown financial stability over some time. However, some global brokers are also worthy of consideration. From those listed, our team of experts review each one in detail, paying close attention to the things that matter most to stock traders.

The broker's website is checked for functionality and security, particularly where any sensitive data is concerned. We try out the broker's main trading platform, looking for those which are intuitive and user-friendly. The same high standards must also extend to any mobile-optimised or app-based platform, including the same asset availability and analytics functionality.

Additionally, we examine the broker's fee structure, ensuring that it is entirely transparent and that there are no hidden extras, nobody wants an unpleasant surprise popping up on their broker's invoice. Last but not least, we take a thorough look at the customer support the broker offers, at a minimum we like to see ready access to all information and at least one way to contact the broker in the event of an urgent problem.

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Risk Warning / Ad Disclosure

Risk Warning: The products offered by the companies listed on this website carry a high level of risk and can result in the loss of all your funds. You should never risk money that you cannot afford to lose.

Ad Disclosure: Some of the links that you will find on this website are advertisements for which we do receive financial gain for referring new customers.

Frequently Asked Questions

FAQ

Is stock trading in the UK legal and safe?

Stock trading is a legitimate form of trading in the UK and if you opt for an FCA-regulated stockbroker, your investment is guaranteed to be kept safe. Some offshore brokers also offer services to UK traders, but if they are not FCA licensed, you will not have the same level of protection.

Do I need to pay fees and taxes on my profits?

Stockbrokers will apply fees to your account, but formats vary. Fee types include per trade, commission-based or invoiced for services provided. Stock trading profits are taxable in the UK and may attract either Income or Capital Gains Tax depending on your status.

Can I test brokers before trading with real money?

While more brokers are now offering a practice account, it is not always a full version of their live trading platform. Some broker demos show limited assets or feature historical data; others are only available for a trial period, usually 30 or 90 days.

Is it easy to make deposits and withdrawals?

Before opening a stock trading account, your stockbroker must verify your funding source and it is standard practice to only process transactions using the verified bank account. Once that stage is complete, the process is straightforward.

Can I trade using my mobile or tablet device?

More UK brokers are now offering mobile access to your stock trading account, but the functionality of mobile apps between brokers can vary considerably, a subject we cover in our broker reviews.

Meet The Author
Sundar Kapadia
Sundar Kapadia
Risk Manager

Sundar never ceases to impress us; being an Actuary makes him an expert in assessing risks and dealing with uncertainty. He’s been contributing to the site as an author for around 4 years, and we know our readers love his various insights and predictions.

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