How to buy shares in the UK

Thanks to considerable advances in technology, mobile devices and more reliable ways to access the Internet, stock trading in the UK has become much more accessible in the last decade. The world of stock trading is now open to almost anyone with a suitable device and a sound Wi-Fi or network connection.

Whilst it is unlikely you will have any difficulties accessing your broker’s platform from a desktop PC, if you plan to trade mostly on the move, then it is essential to find a broker that provides an advanced mobile app as well. There is still a level of inconsistency between stock trading apps, so it is certainly worth checking in advance which brokers can provide the level of functionality you are going to need.

So, how to buy stocks UK? First things first, the one thing you cannot do without is a stockbroker, because only corporate members of a stock exchange are permitted to trade there.

You are also likely to find that stockbrokers work in a different way to other online trading platforms and offer different levels of service to clients. All will have a unique fee structure too. The three main levels of service you are likely to encounter are:

Execution-only

This category is the ‘self service’ version for traders who are happy and comfortable making investment decisions and implementing them. It is in this category that you would find free stock trading UK opportunities, which means that although you won’t pay commission, you will still incur some other types of fees. Always check that your broker has made these clear in advance to avoid a nasty surprise.

Advisory

At an advisory level, you will have your own experienced portfolio manager who is qualified to provide you with financial advice associated with the suitability or risk attached to any investment. This financial advice may also extend to planning your trading strategy, although not in all cases. What it does not include is making decisions on your behalf, you always get the final say.

Discretionary

You will often see this option described as ‘full-service brokerage’. Basically, you hand the reins over entirely to your stockbroker, who does everything for and lets you know regularly about how your investments are doing. This type of stock trading will cost you around 10% of your total portfolio value per annum for the privilege.

Fees

Regardless of the description the broker uses, it is a business after all, which must cover its costs and show a profit, so there will always be fees of some sort to pay. A commission-free brokerage will still charge you for certain services, including administration, currency exchange, deposit/withdrawal and software subscriptions.

As we explained earlier a full-service broker charges an all-inclusive fee, calculated as a percentage of your total portfolio value which usually equates to about 10%, payable monthly or quarterly. The middle, advisory option varies in terms of cost to maintain and may just be something you are offered free of charge as an added incentive if your portfolio is suitable.

Taxation

In the UK, there are two taxes applicable to stock trading, Capital Gains Tax and Income Tax, which are both administered by HMRC (Her Majesty’s Revenue and Customs. Your liability will depend on whether you are classed as an ‘investor’ or a ‘trader’, based on any profit you make over and above the tax-free threshold. Tax for stock traders is a complex subject in the UK and we recommend that you keep accurate accounts related to all trading activities and consult an accountant if you have any doubts.

The focal point of most 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 FTSE 100 companies then that is fine, but if you want to get involved with more global markets, they are readily available too.

A surprising number of UK stock traders have a preference for blue-chip stocks, which tend to come at a higher share price but are also representative of companies that are renowned for their financial stability as well as their propensity for dishing out high annual dividends to shareholders.

Three of the best-known NASDAQ-GS listed blue-chip shares currently available are Amazon Tesla and Apple. So here is a brief rundown on those three:

Amazon

Amazon is a particularly intriguing company and it is clear that its shares do not particularly conform to its stock sector tag of Consumer Discretionary, tending to trend more in line with the Information Technology sector. This is most likely because of its ever-expanding AWS cloud-computing component and the various other technological pies it has its fingers in.

However, something we can tell you is that to buy Amazon shares, UK investors will pay somewhere in the region of $3000 per share, following on from consistent increases in the share price throughout 2020.

Tesla

Tesla is very similar to Amazon in some respects. It is classified under the same Consumer Discretionary stock sector and its share behaviour has followed similar market trends to those in the IT sector.

Some say it is in the wrong sector, but regardless of where it belongs, to buy Tesla shares, UK traders will pay £661 per share at today’s prices, a somewhat massive jump from the $91 cost per share of twelve months ago.

Apple

There are some businesses that always buck the trends and do well regardless of any outside influences and Apple seems to be one of those that always seem to come up smelling of roses.

There is never a good or bad time to buy Apple shares, UK share traders have discovered. It always seems to be a good investment, which has held steady at the $130 per share level for many months, despite the events of 2020 and all it could conspire to throw at the economy.

Finding the right stockbroker is by no means an easy task, it takes time, patience and plenty of research.  However, investing in UK shares can be a very rewarding trading option, provided that you are willing to put in consistent hard work and keep up with the global economic and political influences that can easily affect your portfolio’s balance.

Please take some time to browse through our guides and carefully curated broker reviews.  You will find that they provide straightforward reading, designed to cover all of the most important aspects of stock trading and our honest opinions on the UK’s selection of stockbrokers.