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Compare the UK’s cheapest online brokers

Last updated on 11 February 2018.

Behold! An at-a-glance cost comparison of the UK’s main online brokers and investment platforms. These services enable you to buy, manage, and sell your funds, shares, investment trusts and ETFs at a cheap price. All these services are online and execution-only.

The Good for column shows what we think is the best deal by price, relative to account type and portfolio mix.1

This table is edited by fallible human beings. Do your own research. We fix mistakes as soon as possible but we cannot be held liable or accountable for any errors. Please add updates or erratas in the comments below.

Like other price comparison websites, we may be paid a bonus if you sign-up via a link. This does not affect what you pay.

Hate maths? Let our comparison tool do the sums for you.

Flat fee brokers / platforms

Company Annual platform fee Fee notes Dealing: Funds Dealing: ETFs, ITs, & shares Regular investing Entry fee Exit fee2 Good for
Interactive Investor3    £90 £22.50 worth of free trades every quarter £10* £10* £1 £0 if account open less than a year. £10 per holding otherwise.  Min £30/Max £250
Shares ISA
Trading  –
SIPP + £120 + £120 drawdown + £90 Alternative to ShareDeal Active
ShareDeal Active Telephone dealing only for funds £9.50 £9.50 £12 per holding + £60 account closure Large SIPP portfolios
Shares ISA £60 £18 cash withdrawal
Trading £18 cash withdrawal
SIPP £0 if SIPP is linked to dealing account. Otherwise £118.80. +£180 drawdown + £60 Fund portfolios over £60K and mixed ETF/Fund portfolios over £50K
Halifax Share Dealing £12.50 £12.50 £2
Shares ISA £12.50 £25 per holding. £125 max Alternative to Lloyds, Selftrade
Trading £25 per holding. £125 max Alternative to Lloyds, Share Centre, Selftrade
SIPP £90 if SIPP worth less than £50K. £180 if SIPP more than £50K + £180 drawdown4 £60 per transfer. Max £300 £25 per holding (£215 max) +£90
iWeb £25 one-off account opening charge Does not apply to SIPP £5 £5 Large portfolios and infrequent traders, check vs ii, Lloyds, Share Centre, and Halifax
Shares ISA £25 per holding. £125 max
Trading £25 per holding. £125 max
SIPP £90 if SIPP worth less than £50K. £180 if SIPP more than £50K + £180 drawdown5 £60 per transfer. Max £300 £25 per holding (£215 max) +£90
Lloyds Bank Share Dealing £40 Only one £40 charge if you hold ISA and trading account £1.50 £11* £1.50 £25 per holding. £125 max
Shares ISA Fund portfolios over £26K6, mixed ETF/fund portfolios over £36K7
Trading Fund portfolios over £26K8, mixed ETF/fund portfolios over £36K9
SIPP n/a
The Share Centre 1%. £7.50 min* 1%. £7.50 min* 0.5%. Min £1 £25 per holding Large trading accounts
Shares ISA £57.60
Trading £21.60 Alternative to Lloyds, Selftrade
SIPP £172.80 + £234 drawdown £90 if in drawdown  +£120 if in drawdown
Clubfinance Frequent Trader £15 inactivity fee per quarter. Waived by 3 trades per quarter 0.21% fee on debit card payments in, use BACs £4.95 £4.95 £15 per holding Frequent traders
Shares ISA
SIPP n/a
Alliance Trust Savings 4 free trades p.a. £9.99* £9.99* £1.50
Shares ISA £120 £120
Trading £120 £72
SIPP £252 £342 drawdown 1% of value capped at £18010

Note: Charges may actually be due per month, quarter, six monthly or annually. We’ve chosen to show annual cost of service. All prices include VAT. *A frequent trader rate or bonus is also available.

Percentage fee brokers / platforms

Company Annual platform fee Fee notes Dealing:
Dealing: ETFs, ITs, & shares Regular investing Entry fee Exit fee11 Good for
Vanguard Investor 0.15% on first £250,000, 0% thereafter. Tiered charge. Max £375  Investments restricted to Vanguard funds and ETFs only £0 £0 twice per day, £7.50 to trade at other times £0 £0 Beats other % fee brokers in most cases and flat-fee brokers up to £40-£56K but restricted range
Shares ISA Fund portfolios up to £43K, mixed ETF/fund up to £56K, ETF portfolios up to £39K
Trading Fund portfolios up to £43K, mixed ETF/fund up to £56K, ETF portfolios up to £39K
SIPP n/a
Close Brothers 0.25% on all investments £0 £8.95 £0 Small fund portfolios
Shares ISA
SIPP £90 drawdown
Cavendish Online 0.25% on all investments 0.20% on whole balance if over £200K in all accounts combined £0 £10 £1.50 £0 Small fund portfolios
Shares ISA Fund portfolios below £26K
Trading Fund portfolios below £26K
SIPP Fund portfolios below £60K, mixed ETF/fund below £50K
Charles Stanley Direct 0.25% on first £250,000 of funds12 0.25% on shares, ETFs and ITs. Min £24 / Max £24013 £0 £11.50 £10 per holding Small fund portfolios
Shares ISA
SIPP + £120 No £120 charge if £30,000+ across all accounts. £180 drawdown + £150
Selftrade 0.3% on first £50K of funds. 0.25% £50K – £250K. 0.15% over £250K. £1,000 max. Tiered £12 inactivity fee per quarter. Waived by single trade per quarter or if any funds held £0 buy, £11.75 sell £9.99* ETFs,£11.75* shares £1.50 ETF portfolios with unrestricted range
Shares ISA £15 per holding ETF portfolios over £22K14
Trading £15 per holding ETF portfolios over £22K15
SIPP + £118.80 + £180 drawdown £90
Fidelity 0.35% on all assets worth £7500 – £250,00016 £45 p.a. if assets worth under £7500, or 0.35% with monthly savings plan17 £0 £10 for ETFs / ITs £1.50
Shares ISA ETF and IT fees capped at £45
Trading ETF and IT fees do not apply
SIPP ETF and IT fees capped at £45
AJ Bell Youinvest 0.25% on first £250,000 of funds18 0.25% on first £250K then 0.1% on next £750K etc £1.50 £9.95* £1.50 £25 per holding
Shares ISA + 0.25% charge (max £30) on ETFs, ITs, shares, and bonds
Trading + 0.25% charge (max £30) on ETFs, ITs, shares, and bonds
SIPP + 0.25% charge (max £100) on ETFs, ITs, shares, and bonds. + £120 drawdown + £90 ETF portfolios below £15K
Bestinvest Platform fee applies to all investments Tiered charge e.g. 0.4% on first £250K, 0.2% on next £750K etc £0 £7.50
Shares ISA 0.4% on first £250,00019 0.2% £250,001 – £1 million, 0% over £1 million
Trading 0.4% on first £250,00020 0.2% £250,001 – £1 million, 0% over £1 million
SIPP 0.3% on first £250,00021. No drawdown fee 0.2% £250,001 – £1 million, 0% over £1 million + £150
Barclays Smart Investor 0.2% on funds (£48 min, £1500 max) 0.1% on ETFs, ITs, shares, bonds £3 £6* £1 £0
Shares ISA ETF portfolios below £22K, mixed ETF/fund portfolios below £36K
Trading ETF portfolios below £22K, mixed ETF/fund portfolios below £36K
SIPP + £150 + £120 drawdown £90 per transfer capped at £450 + £90
Hargreaves Lansdown 0.45% on first £250,000 of funds22 Tiered charge. You pay 0.45% on first £250K then 0.25% on next £750K etc £0 £11.95* £1.5023 £30 account closure + £25 per holding
Shares ISA + 0.45% charge (max £45) on ETFs, ITs, shares, and bonds
SIPP + 0.45% (max £200) on ETFs, ITs, shares, and bonds No drawdown fee
Aviva 0.4% on first £50,000 of funds24 Tiered charge. You pay 0.4% on first £50K then 0.35% on next £200K etc £0 £0
Shares ISA

Note: Charges may actually be due per month, quarter, six monthly or annually. We’ve chosen to show annual cost of service. All prices include VAT. *A frequent trader rate or bonus is also available.

Share dealing brokers

Company Annual platform fee Fee notes Dealing:
Dealing: ETFs, ITs, & shares Regular investing Entry fee Exit fee25 Good for
Degiro  – Degiro may lend out your shares. A custody account avoids this but charges €1 + 3% (max 10%) for dividend payouts26 n/a Commission free ETF selection. €2 + 0.02% for other ETFs. £1.75 + 0.004% for shares27 €10 per holding €10 per holding No trading costs on select ETF range,28 frequent traders
Shares ISA n/a
SIPP n/a
X-O.co.uk No funds n/a £5.95 SIPP ETF portfolios with unrestricted range
Shares ISA £18 per holding +£60 account closure
Trading £18 per holding
SIPP £0 £0 if SIPP is linked to dealing account. Otherwise £118.80. +£180 drawdown £60 ETF portfolios over £15K
Interactive Brokers $10 inactivity fee per month. Reduced by value of trades29 $10,000 min to open account. $20 inactivity fee if equity balance below $2,00030 n/a £631 International shares / ETFs
Shares ISA
SIPP Fees vary

Note: All prices include VAT.

Who is this online broker comparison table aimed at?

We have focussed on low cost platforms that suit DIY investors who want to build a diversified portfolio through index funds and ETFs. The Good for column is therefore biased towards passive investors.

Percentage fee brokers are much better for small investors whose assets are likely to remain below £25,000 (in an ISA) or £70,000 (in a SIPP) for some time to come. If you can only invest small amounts at a time then choose a broker who charges £0 for fund dealing. (Aim to pay no more than 0.5% of your contribution in dealing costs, at the very most).

Fixed fees take a disproportionate chunk out of the assets of small investors. This is why Charles Stanley, Close Bros or Cavendish Online are generally the best for small investors using ISAs and Best Invest or Cavendish Online is best for small investors using SIPPs.

Flat fee brokers are better for most investors who’ve accumulated over £25,000 (in an ISA) or £70,000 (in a SIPP) – percentage fees can siphon off eye-watering amounts if your broker doesn’t apply a cap. Sadly, the table is complicated because every broker is trying to carve out a niche for itself by offering something slightly different to its competitors.

That means there is no one size fits all solution. The Good for column in the table gives you an idea of each broker’s strengths.

Our calculations assume one purchase per month and four sales per year, and that you take advantage of lower priced regular investment schemes when available. Portfolios consist of funds or ETFs or a 50:50 mix.

ETFs vs fund portfolios – Below around £25,000 you’re probably better off with funds. There’s very little to separate Interactive Investor, Halifax, Lloyds, iWeb, YouInvest, Selftrade and Share Centre above that level if you’re a moderate trader using either product type. Ultimately, product OCFs, your trading frequency and picking the right tracker for the job will be more important.

Beginners starting in funds should look at Cavendish Online or Close Bros. 
Low traders – check iWeb and Halifax for ISAs.
Whichever broker you plump for, do check it carries the funds you require. There is considerable variation in range between platforms.

Where is my missing broker?

We haven’t included every last option in this version of our table but we have included the most competitive players in the market. Do let us know if you think we’ve missed anyone important.

More on costs and fees

The ‘Platform charge’ category is intended to capture the various types of service fee typically levied by platforms i.e. custody fee, platform charge, administration fee, inactivity fee and so on until the end of time / your tether.

Assume platform charges are levied per account unless otherwise indicated in the notes column or the footnotes.

Platforms levy various additional costs for extras such as telephone trading. Check a platform’s rates and charges schedule before committing.

These costs are on top of the suite of fees you will pay for investment products such as the Ongoing Charge Figure (OCF).

Take some time to calculate the likely cost of your portfolio when choosing the right broker.

SIPP charges on the table don’t include the various additional fees levied for services once you’re in drawdown.

Platforms run temporary offers and discounts from time-to-time. These are ignored as investing is for the long-term.

Understanding account names

Accounts names vary across the discount broker universe. However they typically conform to the following types:

  • Trading = taxable account i.e. not an ISA or a SIPP. Suitable investments typically include funds, shares,Exchange Traded Funds (ETFs), Investment Trusts (ITs), bonds and more.
  • Shares ISA = Stocks and Shares ISA. Tax sheltered. Suitable investments as above.
    • SIPP = Self-Invested Personal Pension. Tax sheltered. Suitable investments as above.

Why are there only links to some brokers?

Links to brokers are affiliate links, where we may be paid a fee if you go on to open an account with them. We do not choose to include brokers in our table based on whether such affiliate fees are on offer, nor does the existence of such an arrangement change the fees you pay – it is a marketing payment made by them as an incentive for websites to drive traffic to their site. We’d like more brokers to pay us when we introduce new customers – it helps us pay our way on Monevator! Including all brokers but only linking where an affiliate agreement is in place was the best compromise we could come up with.

What this table won’t tell you

Some of these brokers may not be regulated by the UK authorities. Please check directly with each broker, and read our guide to investor compensation schemes to understand why this matters.

We’ve not considered customer service and fringe benefits such as website user experience and research tools, which may be meaningful. Ask away here or at Money Saving Expert’s Savings & Investments board, the ex-Motley Foolers on the Lemon Fool board, or reddit for a broader opinion.

We haven’t accounted for exclusive, discounted funds. Most platforms stock much the same range but the bigger players in the market can negotiate slight fee discounts on certain funds. If you’re tempted by those ‘bargain’ offers then make very sure that your overall cost of investment isn’t more expensive once you load the platforms fees on top.

Please tell us about additions or corrections using the comment form below. Please supply a Web link to your data if possible in your comment to help us verify what should go into the table.

We’ll keep this table as up-to-date as possible, and conduct a sweeping review every three months.

  1. Our calculations assume one purchase per month and four sales per year, and that you take advantage of lower priced regular investment schemes when available. Portfolios consist of funds or ETFs or a 50:50 mix. []
  2. Out to another broker []
  3. Also known as ii []
  4. £300 if age 75+ []
  5. £300 if age 75+ []
  6. £43K vs Vanguard []
  7. £56K vs Vanguard []
  8. £43K vs Vanguard []
  9. £56K vs Vanguard []
  10. No charge for SIPP opened after 31 Mar 2017 if you’re over 55. []
  11. Out to another broker []
  12. 0.2% £250,001 – £500,000, 0.15% £500,001 – £1million, 0.05%£1million – £2 million, 0% over £2 million. []
  13. Charge waived by 1 trade per month. []
  14. £39K vs Vanguard []
  15. £39K vs Vanguard []
  16. 0.2% £250,000 – £1 million. Charges not tiered. Charge capped at £1 million. Treat multiple accounts as one, e.g. 0.2% applies to all assets once £250K barrier crossed. ETF and IT fees capped at £45. []
  17. ETF and IT fees capped at £45. []
  18. 0.1% £250,001 – £1 million, 0.05% £1 million – £2 million, 0% over £2 million []
  19. Charge applies to each account separately []
  20. Charge applies to each account separately []
  21. Charge applies to each account separately []
  22. 0.25% £250,001 – £1 million, 0.1% £1 million – £2 million, 0% over £2 million. Charge applies to each account separately []
  23. on FTSE 350 shares, some ETFs and ITs []
  24. 0.35% £50,001 – £250,000, 0.25% £250,001 – £500,000, 0% over £500,000. []
  25. Out to another broker []
  26. No funds. []
  27. £5 max []
  28. Note, these are ETFs traded on US and European exchanges not LSE. []
  29. e.g. $10 fee – $6 trade = $4 actual fee that month. Waived on $100,000+ accounts. []
  30. Under 25s can open an account with $3,000 and the inactivity fee is $3. []
  31. up to £50,000 value. £6 + 0.05% of incremental trade value over £50,000. Max £29 []
{ 2153 comments… add one }
  • 2051 Jeff Beranek March 10, 2018, 7:02 pm

    I’m afraid I don’t know if you get any allowances on dividend or interest income as a “non-resident alien” (like my British wife!). As a US citizen I get allowances, but it gets very complicated because I have different types of income in both countries and need to take advantage of a UK/USA tax treaty to try and avoid paying tax twice on the same income. So currently I can avoid paying the withholding tax. It’s called withholding tax because they withhold the money from you unless you can prove that you can be taxed less (or more!).

  • 2052 Jeff Beranek March 10, 2018, 7:23 pm

    Just to complicate things further, strictly speaking you should be declaring any foreign income you receive to the HMRC, as well as any tax already paid on that income. This is normally done via a self assessment form. You should also keep a record of any purchases and sales for your capital gains records – unlikely to be an issue on small holdings of course. This is another argument for holding ISAs – no paperwork required.

  • 2053 The Accumulator March 10, 2018, 10:33 pm

    @ New Investor – thank you for your comment. Really appreciate it. I saw your comment on US domiciled ETFs but time pressures are preventing me from engaging on that one for now. I hope to, but not sure when.

  • 2054 The Accumulator March 10, 2018, 10:43 pm

    @ Jeff Beranek – Have also been appreciating your many constructive comments!

  • 2055 phil March 19, 2018, 4:24 pm

    Following on from comments a month of so back regarding US trading account.
    Im looking to keep ISA wrapper but looking for cheapest way to trade US shares. I probably aim to do 50/50 between UK and US. Exchange rate charges are obscene by most companies, for example TD direct/ HL etc charge 1.5% each way!! Believe Saxo is 1%? Really this is day light extortion and should be wiped out from the industry, they should just have their dealing rate and deal at spot exchange rates!

    From lots of research it seems 2 main cheapest options that are light years ahead of others:

    – IG sharedealing account: – 0.3% forex + 2 cents a share: 10K worth of $20 stock = £30(forex chrg)+$10

    – HSBC: appears to be no forex charge but $30 flat rate charge. Not as cheap for frequent trader/ UK shares as IG

    In brief HSBC appears a lot cheaper but have no idea what they’re like and not the cheapest for UK. On the other hand im deeply untrusting with IG as a business, and they seem good for say £10k of stock but if you’re buying £20/£30k then the fee would skyrocket.

    Do people have experience with HSBC direct invest plus? Degiro also looking to implement an ISA option but no timeframe and ive heard questions over their execution/ spread etc.

  • 2056 Jeff Beranek March 19, 2018, 5:24 pm

    My father has an HSBC InvestDirect+ account, but it’s not currently configured for trading US shares. The quarterly fee of £10.50 and trading fee of £10.50 are not the cheapest but not outrageous. He also has an ISA account which doesn’t cost any extra to open. You can trade UK gilts (not corporate bonds) but it costs £39.95 a trade(!) The main reason we use this broker is the amount invested qualifies him to have HSBC Premier currents account in both the USA and the UK, with good rates for transferring money between them. The trading site is very basic, but works well. Dividends are paid on time. You can launch the platform from the HSBC Premier bank account, but it’s a separate website. I haven’t looked at the cost of trading US shares, because it we wanted to do that we would probably open a Charles Schwab brokerage account to sit alongside an existing Schwab IRA (we are US citizens). I think to enable US trading I would need to call HSBC and open a US$ cash account to trade from.

  • 2057 phil March 19, 2018, 5:40 pm

    thanks Jeff,

    Very useful, its just annoying how much more expensive/ ripped off we are to trade US shares, especially when its the currency exchange margin which seems to be an underhanded way to get extra commission . My preference would be for an interactive brokers account but they stopped doing ISA’s a while ago i think, as did a number of other US brokers. Assume its just too much faff for them to be worth their while to provide it for UK.

    As you say, the costs aren’t the best around, but not too bad, and the advantage of the ISA wrapper dwarfs any advantage from using a US broker with USD and super cheap fees outside an ISA.

  • 2058 premierfella March 23, 2018, 11:22 am

    Re: Clubfinance Frequent Trader
    Their website quoted different prices for transfers out in different places (free; £15 per holding) so I queried it with them.
    Their reply: actual transfer out currently costs £25 per holding!

  • 2059 Snowman March 23, 2018, 12:11 pm

    Re Clubfinance Frequent Trader in specie (reregistration) transfer costs:

    According to the ‘Charges Schedule’ that you can downloaded from


    “Transferring investments to another Nominee, or to your own name (‘certification’) £15.00 per stock”

    So the charge here is £15 per investment (re-registration is covered by the transferring to another Nominee)

    Sounds like the phone info is wrong.

  • 2060 premierfella March 23, 2018, 4:10 pm

    The website said “no charge” yesterday, before I queried it via email.
    The linked document from the website (‘Charges Schedule’) said £15, hence why I emailed them.

    The email reply I got said:
    “I have checked with James Brearley (the provider of the service) and they confirmed that the charge to transfer out to another provider or to certificates is £25 per line of stock”.

    I’m merely passing on the information I received.

  • 2061 Jeff Beranek March 23, 2018, 4:24 pm

    Regarding the proposed upcoming AJ Bell IPO… Is it just me, or does the idea of owning shares in the company responsible for holding your pension or ISA just scream “Increased Counterparty Risk”! It’s an interesting way form them to encourage customer loyalty, but I think I would prefer to keep the two things separate. Just because I might own shares in a cigarette company does not mean I smoke.

  • 2062 B80 March 24, 2018, 7:37 am

    Hi all, how is the Barclays Platform now behaving?

    I can recall there being teething issues when it was released last year.

  • 2063 Greg March 24, 2018, 10:28 am

    Please also think about the provider’s stability when selecting a platform. I was with Beaufort Securities who is now in administration.

  • 2064 Jonny March 26, 2018, 3:48 pm

    @Greg If you’re happy sharing, I’d be interested in hearing more details of what happens when your provider goes into administration, and the process you’re going to have to go through to get things transferred to a new provider?

  • 2065 The Investor March 26, 2018, 6:55 pm

    @Greg — I’d second the call for any information or experiences you’re happy to share here. I often talk about these sorts of risks (and presumably your money was properly segregated and you’ll get your money back? I know nothing about this situation).

    Practically speaking it’s very difficult for us or anyone else to really evaluate the likelihood of these sorts of things happening. As I’ve noted before, last time anyone did a deep dive on the subject (a government study into platform competitiveness) only one platform (the largest) really looked profitable (and it seemed to be making all the money!) So arguably all the smaller players are more risky from this standpoint, although when part of bigger operations (e.g. Barclays) it’s possible the platform is being subsidized to gain scale or that it’s a loss leader for other services.

    It’s also possible that the government study I’m thinking of is out-of-date or was wrong, although the consolidation we’ve seen since in the space suggests to me it was not! 😐

  • 2066 kean March 27, 2018, 10:59 am

    @Greg, agree with The Investor & Jonny – if you are willing, it would be really useful to learn from your experience. No doubt like many, I worry about this type of situation.

  • 2067 New Investor March 27, 2018, 5:38 pm

    Sorry for the late response, I forget to check this page regularly and had not got email notifications.

    @ The Accumulator
    No worries, I will check that comment once in a while 🙂

    @ theta, Jeff Beranek

    My inclination towards IB as a platform and towards US-domiciled ETFs are two separate things.

    Firstly, IB. As I understand it, if I only invest in UK/Ireland-domiciled ETFs and Funds, then I have no additional US/UK tax/reporting requirements compared to investing in the same funds using a UK-based brokerage. Ie, where the brokerage is located doesn’t make a difference if I’m investing in the same funds. Is this right? This is what I’d assumed so far. I agree that ISAs are useful, but I’m talking about the scenario where you’ve filled up your ISAs _and_ have a significant amount left over to invest in a taxable account. The fees of IB are just very low if you have an account value of >= $100k and this is a clear benefit to me.

    Secondly, US-domiciled ETFs. I agree that things get complicated. Here is a link to my comment where I repeated what @ivanopinion had commented earlier in that thread: http://monevator.com/etfs-vs-index-funds-differences/#comment-875632 . Yes there is withholding tax on US-domiciled ETFs, but withholding tax appears to exist anyway – the difference is just that if you invest through an Ireland-domiciled ETF then the ETF pays the withholding tax on your behalf and so you don’t get to use it as a credit against further tax in the UK. So there is a small benefit to US-domiciled ETFs, which has to be offset against the cost of: FX exchange, Estate tax filing, and form filling.

    The next point is that both US- and Ireland-domiciled ETFs are superior to UK-domiciled OEIC Index Funds, as the OEIC apparently pays both the withholding tax and a further tax to the UK.

    Again, not sure if I’ve understood this correctly. Please correct any errors I’ve made!

  • 2068 ivanopinion March 27, 2018, 5:59 pm

    @ New Investor
    You have correctly understood the conclusions if my tentative calculations were correct. I’m still not confident about this, so anyone who thinks they see a flaw should raise it.

    Note that US domiciled ETFs are only better than Irish ones if the income is taxable in the UK. If sheltered by ISA/SIPP wrapper or a tax allowance, there’s no tax saving, so I would definitely favour the Irish domiciled ETF. A UK UT is still worse, though.

  • 2069 theta March 28, 2018, 2:49 pm

    Correction on your last point: In a SIPP the US div tax withholding is 0% and there are no issues of US estate tax filing or form filling, so US domiciled ETFs are much better than IE domiciled.

  • 2070 ivanopinion March 28, 2018, 3:06 pm

    Yes, I’m forgetting the preferential US treatment of pension funds. That’s a big advantage for US domiciled funds if held via a SIPP, as the effective tax rate is zero. …At least until you withdraw it from the pension, when the rate will depend on your then marginal rate.

    I believe the procedure is that the tax is withheld and the pension fund must claim a refund from the IRS. So you do need to check that the SIPP in question will reclaim the WHT and whether it makes charges for doing so.

  • 2071 ivanopinion March 28, 2018, 3:48 pm

    Thinking some more about the tax on withdrawal from the SIPP:

    Most of us are going to have a marginal rate during retirement equal to basic rate tax. Currently 20%, though you can take 25% tax free, so effective rate of 15% unless you exceed the LTA. So, the eventual tax on the dividend income from a US domiciled ETF, held in a SIPP, will be 15%, same as if you held it in an ISA. The US tax exemption is not a net benefit (compared with an ISA).

    But if you are going to hold the ETF in a SIPP, best to choose the US domiciled one, otherwise you lose 15% as WHT and a further 15% (of the remaining 85%) on withdrawal, which is an effective rate of 27.75%.

  • 2072 DianaW March 28, 2018, 5:30 pm

    Has anyone else been having trouble funding an account with II since its website revamp and change of SIPP management?
    My bank has checked everything that might have caused it to interfere with today’s attempted transfer from my registered bank account to my II account of this tax year’s pension contribution and come up blank. What might be going on/have gone on at the II end is impossible to tell.
    Since II are constantly paying me dividends etc, it’s hard to believe that the two accounts are having trouble talking to one another….

  • 2073 PA March 28, 2018, 8:01 pm

    @DianaW – not sure if this is relevant but …. on the old website I was trying to pay by using the Chrome browser but it always failed (something to do with pop-ups I think) so I switched to Edge (MS on Windows 10) and it worked fine.

    Suggest you try a different browser

  • 2074 theta March 28, 2018, 9:04 pm

    I’m not sure I agree with your math. The effective tax rate on pension withdrawals is the same for all investments, not only US ones. The advantage of holding US funds over IE in a SIPP stands. It’s not 15% btw, it’s 15% of the divs, so about 30bps a year for stocks or 50bps or more for bonds. This is a net gain regardless of tax rates. It may be too small for some to bother. Above about £100k the savings pay for the IB SIPP administrator costs (so one can take full advantage of it without wasting the gains in FX charges).
    My tax optimised asset allocation is:
    SIPP: US bonds/REITs and if there’s space US stocks
    ISA: Higher yielding equity ETFs (that’s Europe, Asia Ex-Japan and EM)
    Taxable accounts: Remaining of US equity allocation and Japan (lowest yield of all)

  • 2075 theta March 28, 2018, 9:09 pm

    To clarify: that’s not exactly my allocation because the actual desired asset allocation trumps tax considerations and the space of each account is not flexible. But that’s the thought process on which account should a particular fund be.

  • 2076 ivanopinion March 28, 2018, 10:43 pm

    Which bit of my maths in post 2071 is wrong?
    Is it the bit where I said that there is a tax saving on US domiciled ETF in a SIPP, compared with an Irish domiciled ETF? I thought I was agreeing with your post 2069 on that.
    Or is it where I said that the exemption from US tax on a US domiciled ETF in a SIPP is not a benefit in the long run, compared with holding it in an ISA? The exemption saves 15% WHT, but you pay 15% income tax when you draw the dividend income. So, you end up with 85 for every 100 of dividend from the ETF, just as you would if that ETF is in an ISA.

  • 2077 theta March 28, 2018, 11:07 pm

    The latter is wrong. This part specifically: “So, the eventual tax on the dividend income from a US domiciled ETF, held in a SIPP, will be 15%, same as if you held it in an ISA.”
    We are comparing holding US domiciled ETF in a SIPP vs IE domiciled ETF in a SIPP or ISA (AFAIK you can’t have US domiciled ETF in an ISA – although it wouldn’t make a difference as the 0% withholding tax applies only to pensions). The US fund in a SIPP will have 0% div tax leak, the IE fund will have 15% div tax leak that is lost – you can’t reclaim it or use it as a credit.
    The 15% effective tax rate that you mention (20% basic tax rate on 75% of pension assets) applies equally to both US and IE domiciled funds. After 20-30 years of contributions and 30-50bps of compounding annual outperformance the US domiciled fund will result in a significantly higher SIPP balance (compared to having been invested in an equivalent IE fund). The tax rate at the end on withdrawals is irrelevant for the comparison as it applies equally to both US and IE funds. The point here is not a comparison of the two different wrappers (SIPP/ISA) but the most tax efficient allocation of different funds in them. US domiciled funds give an extra advantage IF used inside a SIPP. I am assuming one does use a SIPP, and they do have an allocation in US assets. In that case they are better off buying US domiciled ETFs in their SIPP, and putting the non-US stuff in other accounts.

  • 2078 Max March 29, 2018, 9:10 am

    Hi everyone

    Does anyone perhaps have or know of a spreadsheet which compares broker costs please? I know about the Monevator automated tool and table above of course, but I’d like to see some of the underpinning calculations. I may even write an AI program which I’ll share with everyone here if you like.

    All the best


  • 2079 John. March 29, 2018, 9:33 am
  • 2080 Jeffrey Beranek March 29, 2018, 10:08 am

    Are you sure that 15% withholding tax is taken from US source income on ETFs domiciled in Ireland or Luxembourg for UK tax residents (regardless of platform, ie SIPP, ISA or taxable account)? I cannot find reference to it in the Vanguard S&P 500 ETF prospectus and UBS for example explicitly states there is no withholding:


  • 2081 ivanopinion March 29, 2018, 10:18 am


    I agree, but let me be clear what I agree with (and what I don’t).

    I fully understand and agree that a US domiciled ETF will suffer less tax in a SIPP than an Irish domiciled one in the same tax wrapper. But my posts 2071 and 2076 did not say otherwise. You had already convinced me on that.

    The bit you say you disagree with was a comparison of the same investment – a US dom ETF – in a SIPP or an ISA. So all your mentions in post of 2077 of Irish dom ETFs are not relevant.

    You may be right that a US dom ETF cannot be held in an ISA, in which case there’s no point discussing further, as one leg of the wrapper comparison is impossible. However, I thought that you could ISA any ETF that has UK reporting status? Do US dom ETFs not obtain UK reporting status? And would you put ETFs without UK reporting status into a SIPP?

    IF it is possible to have a US dom ETF in an ISA, then I think you are right that putting them in a SIPP is potentially better, but only assuming you reinvest the divs in US dom ETFs. I assume this is what you meant by your reference to compounding. It seems to me that the difference arises if the returns compound at different rates in the ISA vs the SIPP.

    I only realised you were right about this when I constructed a simple example with the intention of proving you wrong. It was as follows:

    Assume div yield of 2% on the US dom ETF (which is roughly the US market yield). Assume year 1 dividend income from US dom ETF of 100.

    If held in the ISA, after WHT this is 85. If reinvested in the same ETF, it grows at 2%x85%=1.7%. So after three years you have 100x.85×1.017×1.017×1.017 = 89.4. This can be drawn from the ISA tax free.

    If held in the SIPP and it reclaims the WHT on the initial div and the compounding, then after three years you have 100×1.02×1.02×1.02 = 106.1. If you then withdraw this, you pay 15% tax (assuming BRT and no LTA), so you have 90.2. That is slightly higher than the 89.4 from the ISA, purely because of the higher rate of compounding. If you compounded for more years or at a higher yield, the difference would be bigger.

    (If, instead, you reinvested the initial dividend in an investment that is taxed the same in an ISA or SIPP, the compounding would be the same and the WHT benefit on the initial 100 dividend would be wiped out by the 15% tax on withdrawal from the SIPP.)

  • 2082 ivanopinion March 29, 2018, 11:26 am

    Can I ask a bit more about the reasoning behind your tax optimised asset allocation?:
    SIPP: US bonds/REITs and if there’s space US stocks
    ISA: Higher yielding equity ETFs (that’s Europe, Asia Ex-Japan and EM)
    Taxable accounts: Remaining of US equity allocation and Japan (lowest yield of all)

    I assume the rationale is low yield investments outside tax wrappers, because their returns will largely be in the form of cap gains, which you can shelter at £11,300 per year, anyway? Do you prefer the US bonds in the SIPP purely because there a specific US WHT benefit from holding US bonds in a SIPP, but not an ISA? Or would a SIPP be better for bonds from other countries?

  • 2083 theta March 29, 2018, 11:30 am


    A few notes:

    – You can put non-reporting funds in a SIPP. You can put them anyway, but more importantly, there’s no tax disadvantage in putting them there. The problem with non-reporting is that any gains/dividends are taxed as income. This is not an issue within a SIPP.

    – The 15% tax rate you mention (20% tax rate on pension withdrawals after 25% tax free lump sum) is confusing because it’s the same number as the dividend tax withholding rate. But they refer to different things that are not comparable. You have to compare like for like. Your argument is that an investment within an ISA is better than within a SIPP because the latter is taxed on withdrawal. Well, yes, it is taxed, but that’s irrelevant, unless you are trying to decide which of the two wrappers to use. I have assumed that you use both. By the way, saving tax/NI at >40% and paying 15% at withdrawals is arguably better deal than no tax on entry or exit. But ISA vs SIPP is an entirely different discussion, and I can accept that one prefers an ISA over a SIPP and skip the latter if they don’t max out the former. If you do end up having a pension/SIPP, then SIPP withdrawal tax rate is a constant and applies to the whole balance. You still want to maximize that pre-tax balance.

    – It’s not the compounding only, it’s the original amount of the div tax leak that is a net benefit if you use a US ETF in a SIPP (or in a taxable account if you are not a basic rate taxpayer).
    I’ll give a detailed example below. Perhaps too detailed as I know you understand it but it’s for the benefit of others too.

    Say you invest for only one year $5000 in US equity funds, paying $100/year in divs:

    In a SIPP:
    US ETF receives $100 of divs, pays $100 to you.
    IE ETF receives $85 of divs ($15 are withheld before the fund receives them), pays $85 to you.
    You have $15 more with the US ETF. $5100 vs $5085 if no price change.

    In an ISA (if you could trade US ETFs):
    US ETF receives $100 of divs, withholds $15 (because the 0% withholding rate applies only to pensions), pays $85 to you.
    IE ETF receives $85 of divs ($15 are withheld before the fund receives them), pays $85 to you.
    No benefit.

    In a taxable account:
    US ETF receives $100 of divs, withholds $15 (because the 0% withholding rate applies only to pensions), pays $85 to you. You then submit your UK tax self assessment, you pay 32.5% on $100 of dividends, minus the credit for the withheld tax: $100*0.325-$15=$17.5 UK dividend tax. You end up with $85-$17.5=$67.5
    IE ETF receives $85 of divs ($15 are withheld before the fund receives them), pays $85 to you.
    You then submit you UK tax self assessment, you pay 32.5% on $85 of dividends (no tax credit to claim): $85*0.325=$27.625 UK dividend tax. You end up with $85-$27.625=$57.375
    End result: US ETF is better by $10.125

    Of course if you have ISA space, you max that out first before you use a taxable account. If you have maxed it out though, and you use taxable space for additional investments, then you are better off using roughly the general priority I wrote above (post 2074).

  • 2084 DianaW March 29, 2018, 11:32 am

    Belated thanks, @PA.
    I’ve never had trouble using Chrome to pay or otherwise operate my II accounts in the past but tried your idea, using the only other browser I’ve got handy. Unfortunately, not only did that not solve the problem but it was plagued by pop-ups – from Google, of all inappropriate platforms!

  • 2085 Jeffrey Beranek March 29, 2018, 11:42 am

    Sorry, there appear to be a number of cross discussions here, but it’s all good stuff, if kept civil.

    There are only a small handful of US domiciled ETFs that are considered ‘reporting’ by HMRC. HMRC produce a monster spreadsheet of funds that is regularly updated. I’ve done my best to remove all but the US passive low cost funds and all that is left is some good Vangaurd funds, some ETFS ETCs and some VanEck funds. I would personally avoid any non-reporting funds, regardless of domicile, but luckily most of the major Irish and Lux fund appear to be reporting. I suspect most UK platforms would/could drop them if they weren’t. I think if they are reporting and held outside a SIPP or ISA you will need to check the fund provider each year for any excess reportable income to declare to HMRC. These tend to be funds that hold US assests. So I think it’s easier to avoid holding these in a taxable account.

  • 2086 theta March 29, 2018, 11:43 am


    I replied before seeing your last question.
    Yes, that’s basically the reasoning. It’s an exercise of maximising the tax savings compared to a fully taxable account given the constraints of tax sheltered account space.

    CGT is much lower than div/income tax, and you have a nice allowance on top. Lowest yielding equities (Japan is the lowest of all, US second lowest) can go to taxable account without much cost.
    Bonds and high yielding equities should go to tax sheltered accounts. US sourced/domiciled ones have an extra benefit in a SIPP because of the 0% WHT so filling the SIPP with entirely US stuff captures that. (Assuming of course you do want to allocate to US first. The tax tail shouldn’t wag the investment dog!)

  • 2087 ivanopinion March 29, 2018, 12:18 pm

    In reply to 2083, I’m sorry I still don’t follow.
    You said: “Your argument is that an investment within an ISA is better than within a SIPP because the latter is taxed on withdrawal.”
    That’s not what I argued. I argued that the tax on withdrawal wipes out the benefit of the WHT, so neither is better than the other (setting aside subsequent compounding).

    You said: “Well, yes, it is taxed, but that’s irrelevant, unless you are trying to decide which of the two wrappers to use. ” But isn’t that exactly the question we are trying to answer? The one I was trying to answer is: if I have cash I want to invest in a US dom ETF, is it better to do so through an ISA or a SIPP (assuming it is possible to do either)? If the investment is for just one year (so we ignore the effect of compounding), the answer still seems to me to be no. Your worked example does not include the income tax on the withdrawal from the SIPP and I still don’t understand why you would ignore that.

    Given that Jeffrey says there are few US dom ETFs that have reporting status, the issue is largely hypothetical, but I’d still like to understand if I’m missing something in my logic, because it probably means some other decisions I’m making are wrong.

  • 2088 ivanopinion March 29, 2018, 12:23 pm

    Sorry, after “…the answer still seems to be” I should have written “… that there’s no advantage of a SIPP.”

  • 2089 theta March 29, 2018, 1:10 pm

    You say “The [question] I was trying to answer is: if I have cash I want to invest in a US dom ETF, is it better to do so through an ISA or a SIPP (assuming it is possible to do either)?”
    I was actually answering a different question: Given that you have assets in both SIPP and ISA, where should the US ETF go?

    It still applies to your question. You should invest it in the SIPP and move the non-US stuff you have in the SIPP to your ISA (sell it and buy it back in the ISA that is). You will end up better off on the total package.

    Again, I’m assuming you consume both tax sheltered spaces. If you don’t, it’s a different story and ISA vs SIPP depends on individual circumstances. I would still argue though that unless you need the money before retirement, SIPP comes ahead, because of the upfront tax relief, that is usually greater than the withdrawal tax rate. Here’s an example:

    You have £5000 to invest.

    You invest for 20 years, during which time US stocks double in price and pay dividends of 50% of initial price level in total.

    Assuming 40% marginal tax rate and 2% NI, your SIPP gets £8620.69 to invest.
    End SIPP balance is £8620.69 * 2 + £8620.69 * 50% = £21551.725
    This gets taxed at 15% on withdrawal, so you end up with £18318.97

    You invest after tax income, so £5000.
    End ISA balance = £5000 * 2 + £5000 * 50% * 85% = £12125

    So SIPP is way ahead. Most of the benefit is from the tax relief of course, the divs just increase the benefit.

    ISA vs SIPP is a separate topic though, and a more complicated one. For example what if tax rates change or you are at a higher tax bracket at retirement? I was only arguing the div WHT because it’s a net benefit under all circumstances (assuming you consume both ISA and SIPP tax sheltered spaces).

    Regarding reporting status funds, again, this is not an issue in a SIPP, but all the cheap Vanguard trackers have reporting status anyway.

  • 2090 ivanopinion March 29, 2018, 1:56 pm

    Thanks. That makes sense, now. I thought we must be answering different questions.

    (I’m aware that the tax relief makes a SIPP better than an ISA for a higher rate taxpayer, but I’m not currently one of those.)

  • 2091 Max March 29, 2018, 4:48 pm

    John, many thanks for the Snowman spreadsheet


  • 2092 eagleuk March 31, 2018, 8:36 am

    i had bought some US listed etf shares last year to see if it works better.I am with XO sipp(gaudi) and they have charged the tax on dividends.
    i have 7 shares of vanguard small cap which has declared dividend of 0.4552 /share.The total amount is 3.18 usd but they have deducted 0.47 usd as a tax.I did fill the w-8ben form .Do you think it is an error or x-o/gaudi is not part of the sipp administrators who are able to claim zero tax in the sipp.

  • 2093 Jeffrey Beranek March 31, 2018, 10:17 am

    No, that’s the correct withholding of 15%, reduced from the standard 30% charged without the W-8BEN form.

  • 2094 theta March 31, 2018, 11:21 am

    For pensions the correct withholding is 0%, for everyone, not only for a select group of administrators. My understanding is that a correctly filled w-8ben form takes care of that. I would enquire with the SIPP administrator. I suspect the account is not classified as a pension account, which results in the standard withholding of 15% instead of the 0%.

  • 2095 eagleuk March 31, 2018, 11:23 am

    @theta @ Jeffrey
    Thanks for the information.i have written an email to the xo sipp admin.

  • 2096 John. March 31, 2018, 11:31 am

    eagleuk – it sounds like your broker is not doing the paperwork properly.

    US company shares held in a UK SIPP are treated as tax resident afaik, the withholding tax should be 0% assuming the W-8BEN is correct and up to date and the broker is doing their job properly.

    The US-UK DTA (double taxation agreement) means all income in a qualifying pension product is paid gross and that if there is any tax due at some point, it is paid after the fact.

  • 2097 eagleuk March 31, 2018, 10:25 pm

    Thanks.I have written an email to the sipp administrator.The form was submitted last year and shows up in the sipp online folder.It must be a mistake by them.I actively follows the posts here and posts by theta & ivanopinion made me look on the sipp dividends .

    Thanks to all

  • 2098 Jeff Beranek April 1, 2018, 3:00 pm

    So, it looks like I stand corrected regarding the correct level of withholding tax on dividend income of US shares/ETFs held within a SIPP, i.e. 0%. Unfortunately, given that my SIPP is with AJ Bell Youinvest, the 1% currency charge kills any tax advantage I might get for anything less than a 10-year period for switching out of an existing low-cost Irish domiciled Vanguard S&P 500 tracker into a US domiciled one. Obviously if I was starting a US allocation from scratch or had a much larger existing allocation the numbers might be more attractive.

  • 2099 Kraggash April 1, 2018, 5:37 pm

    How did you folks know exactly when I had finished migrating my HSBC American Index fund to VUSA, so you could raise this withholding tax issue?

  • 2100 The Rhino April 3, 2018, 9:29 pm

    Self trade have introduced a 0.3% holding charge for their CTF where previously it was free. This makes it the same as their standard (adult) accounts.

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