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Compare the UK’s cheapest online brokers

Last updated on 28 April 2019.

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.

Flat fee brokers / platforms

 

Company Annual platform fee Fee notes Dealing: Funds Dealing: ETFs, ITs, & shares Regular investing Entry fee Exit fee2 Good for
Halifax / Bank Of Scotland 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 p.a. drawdown £60 per transfer. Max £300 £25 per holding (£215 max) +£90 Fund portfolios above £102K
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 The cheapest if you rarely trade
Trading £25 per holding. £125 max The cheapest if you rarely trade
SIPP £90 if SIPP worth less than £50K. £180 if SIPP more than £50K + £180 p.a. drawdown £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 £26K3, unrestricted mixed ETF/fund portfolios4
Trading Fund portfolios over £26K5, unrestricted mixed ETF/fund portfolios6
SIPP n/a
Interactive Investor7    £119.88 Investor Plan8 1 free trade per month9 £7.9910 £7.9911 £0.99 £0
Shares ISA
Trading  –
SIPP + £120 + £120 p.a. drawdown
ShareDeal Active Telephone dealing only for funds £9.50 £9.50 £12 per holding + £60 account closure
Shares ISA £60 £18 cash withdrawal
Trading £18 cash withdrawal
SIPP £118.80 No fee for first year. + £180 p.a. drawdown
HSBC Invest Direct £42 Charge per account n/a £10.5012 £15 per holding
Shares ISA
Trading  –
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 p.a. drawdown  + £125

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. Other charges may be applicable that aren’t included in the table. N.B. Accounts held with Halifax / Bank Of Scotland, Lloyds Bank, and iWeb count as one for the purposes of the FSCS compensation scheme.

Percentage fee brokers / platforms

 

Company Annual platform fee Fee notes Dealing:
Funds
Dealing: ETFs, ITs, & shares Regular investing Entry fee Exit fee13 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 for fixed daily times, £7.50 to trade at other times £0 £0 Beats other % fee brokers in most cases and flat-fee brokers up to £46-£56K but restricted range
Shares ISA Fund portfolios up to £43K, mixed ETF/fund up to £56K, ETF portfolios up to £47K
Trading Fund portfolios up to £43K, mixed ETF/fund up to £56K, ETF portfolios up to £47K
SIPP n/a
Cavendish Online 0.25% on all investments 0.20% on whole balance if over £200K in all accounts combined £0 £10 £1.50
(Not charged on funds)
£0 Small fund portfolios
Shares ISA Fund portfolios below £26K
Trading Fund portfolios below £26K
SIPP Fund portfolios below £102K
AJ Bell Youinvest 0.25% on first £250,000 of funds14 Tiered charge e.g. 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 p.a. drawdown + £90 Unrestricted ETF and mixed ETF/fund portfolios
Fidelity 0.35% on all assets worth £7500 – £249,99915 Assets under £7500 = £45 p.a. or 0.35% with monthly savings plan16 £0 £0
Shares ISA ETF and IT fees capped at £45 £10 £1.50 (Not charged on funds)
Trading ETF and IT fees waived £10 £1.50 (Not charged on funds)
SIPP ETF and IT fees capped at £45 £0 drawdown 0.1% (ETFs / ITs) ETF portfolios – restricted range
Charles Stanley Direct 0.35% on first £250,000 of funds17 0.35% on shares, ETFs and ITs. Min £24 / Max £24018 £0 £11.50 £10 per holding
Shares ISA
Trading
SIPP + £120 No £120 charge if £30,000+ across all accounts. + £60 p.a. drawdown + £150
Selftrade 0.3% on first £50K of funds. 0.25% £50K – £250K. 0.15% over £250K. £1,000 max. Tiered + £12.50 (+ £4.99 per account) minus dealing fees/fund platform charges per quarter. Min £0 / Max £89.92 p.a. £0 buy, £10.99* sell £9.99* ETFs,£10.99* shares, ITs £1.50 ETF portfolios with unrestricted range
Shares ISA £15 per holding Unrestricted ETF portfolios19
Trading £4.99 quarterly account charge waived if you own ISA / SIPP £15 per holding Unrestricted ETF portfolios20
SIPP + £118.80 + £180 p.a. drawdown £90
HSBC Global Investment Centre 0.25% on all investments Trackers restricted to HSBC index funds only £0 £0 Small fund portfolios
Shares ISA
Trading
SIPP n/a
Close Brothers 0.25% on all investments £0 £8.95 £0 Small fund portfolios
Shares ISA
Trading
SIPP £0 drawdown
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  £150
Shares ISA 0.4% on first £250,00021 0.2% £250,001 – £1 million, 0% over £1 million
Trading 0.4% on first £250,00022 0.2% £250,001 – £1 million, 0% over £1 million
SIPP £120 p.a. + 0.3% on first £250,00023 0.2% £250,001 – £1 million, 0% over £1 million. £120 p.a. drawdown24
Barclays Smart Investor 0.2% on funds (£48 min, £1500 max) 0.1% on ETFs, ITs, shares, bonds (£48 min, £1500 max) £3 £6* £1 £0
Shares ISA
Trading
SIPP + £150 + £120 p.a. drawdown £90 per transfer capped at £450 + £90
Hargreaves Lansdown 0.45% on first £250,000 of funds25 Tiered charge. You pay 0.45% on first £250K then 0.25% on next £750K etc £0 £11.95* £1.50 (Not charged on funds) £30 account closure + £25 per holding
Shares ISA + 0.45% charge (max £45) on ETFs, ITs, shares, and bonds
Trading
SIPP + 0.45% (max £200) on ETFs, ITs, shares, and bonds £0 drawdown
Aviva 0.4% on first £50,000 of funds26 Tiered charge. You pay 0.4% on first £50K then 0.35% on next £200K etc £0 £0
Shares ISA
Trading
SIPP £0 drawdown

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. Other charges may be applicable that aren’t included in the table.

Share dealing brokers

 

Company Annual platform fee Fee notes Dealing:
Funds
Dealing: ETFs, ITs, & shares Regular investing Entry fee Exit fee27 Good for
Degiro  – Degiro may lend out your shares. A custody account avoids this but charges €1 + 3% (max 10%) for dividend payouts28 n/a Commission free ETF selection. €2 + 0.038% for other ETFs. £1.75 + 0.022% for shares29 €10 per holding €10 per holding No trading costs on select ETF range,30 frequent traders
Shares ISA n/a
Trading
SIPP n/a
Freetrade Smartphone app only.
Restricted list of ETFs
n/a £0 for fixed daily time, £1 to trade at other times £0 The cheapest for ETF-only portfolios if you don’t mind restricted range or smartphone-only operation, and stick to £0 fixed time trades
Shares ISA £36
Trading
SIPP n/a
X-O.co.uk No funds n/a £5.95 £18 per holding
Shares ISA + £60 account closure
Trading
SIPP £118.80 No fee for first year. + £180 p.a. in drawdown + £60
IG Funds in SIPP only £0 £8*
Shares ISA £96 £24 waived quarterly by 3+ trades a quarter in shared dealing account31
Trading £96 Only 1 fee if you have ISA and trading account
SIPP £200 + 0.18% on first £500,000 of funds Tiered charge. 0.15% £500,001 – £1 million, 0.05% over £1 million. + £150 p.a. in drawdown + £150
Interactive Brokers $10 inactivity fee per month. Reduced by value of trades32 $20 inactivity fee if equity balance below $2,00033 n/a £634 International shares / ETFs
Shares ISA
Trading
SIPP Fees vary

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. Other charges may be applicable that aren’t included in the table.

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 aimed at passive investors.

Percentage fee brokers are much better for small investors whose assets are likely to remain below £25,000 (in an ISA) or £100,000 (in a SIPP and depending on the mix of assets) 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 Vanguard Investor or Cavendish Online are generally the best for small investors using ISAs and 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 £100,000 (in a SIPP and depending on the mix of assets) – 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 Vanguard Investor or Cavendish Online. 
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 all the various additional fees levied for services once you’re in drawdown. The drawdown figure we do include is the annual ongoing charge you’ll pay for being in flexi-access 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 online broker universe. However they typically conform to the following types:

  • Trading = a taxable account i.e. it’s not not an ISA or a SIPP and will incur dividend income tax and capital gains tax if it grows large enough. 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. Some broker brands are owned by the same financial group. You do not diversify your risk by splitting assets across brands owned by the same group. Our investor compensation scheme guide (linked to above) explains how you can identify these brands.

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. £43K vs Vanguard []
  4. £56K vs Vanguard []
  5. £43K vs Vanguard []
  6. £56K vs Vanguard []
  7. Also known as ii []
  8. £167.88 Funds Fan plan; £239.88 Super Investor plan []
  9. 2 free fund trades per month Funds Fan plan; 2 free UK trades per month Super Investor plan []
  10. £3.99 on Fund Fans or Super Investor plan []
  11. £3.99 on Super Investors plan []
  12. £39.95 for gilts []
  13. Out to another broker []
  14. 0.1% £250,001 – £1 million, 0.05% £1 million – £2 million, 0% over £2 million []
  15. 0.2% £250,000 – £1 million. Charges not tiered below £1 million. No fee for assets over £1 million. ETF and IT fees capped at £45 []
  16. ETF and IT fees capped at £45 []
  17. 0.2% £250,001 – £500,000, 0.15% £500,001 – £1 million, 0.05%£1 million – £2 million, 0% over £2 million. Tiered charge []
  18. Charge waived by 1 trade per month []
  19. £46K vs Vanguard []
  20. £46K vs Vanguard []
  21. Charge applies to each account separately []
  22. Charge applies to each account separately []
  23. Charge applies to each account separately []
  24. £0 if SIPP worth £100K after tax free cash. []
  25. 0.25% £250,001 – £1 million, 0.1% £1 million – £2 million, 0% over £2 million. Charge applies to each account separately []
  26. 0.35% £50,001 – £250,000, 0.25% £250,001 – £500,000, 0% over £500,000 []
  27. Out to another broker []
  28. No funds. []
  29. £5 max []
  30. Note, these are ETFs traded on European exchanges not LSE. []
  31. or by £15,000+ assets in Smart Portfolio accounts []
  32. e.g. $10 fee – $6 trade = $4 actual fee that month. Waived on $100,000+ accounts []
  33. Inactivity fee is $3 for under 25s. []
  34. up to £50,000 value. £6 + 0.05% of incremental trade value over £50,000. Max £29 []
{ 2404 comments… add one }
  • 2351 Jeff Beranek May 2, 2019, 8:49 am

    @Sparschwein. iWeb is certainly not alone in having a high currency exchange fee. I wasn’t aware that you could buy US domiciled funds through Vanguard UK. https://www.vanguardinvestor.co.uk/need-help/answer/why-cant-i-invest-in-vanguards-us-domiciled-funds. Watch out for “non-reporting” international funds.

  • 2352 Sparschwein May 2, 2019, 11:05 am

    @Jeff – you’re right and I realise my post was unclear. Vanguard UK only have a limited selection of index funds and ETFs. Most domiciled in Ireland, a few in the UK, none in the US (as far as I’ve seen). US-based investors get much more choice. For those who are happy with Vanguard’s range of funds available in their ISA, I’d absolutely recommend it. I’m looking for more options to diversify, hence checking other ISA platforms.

    And thanks for pointing out the reporting status which could be a headache. I assumed (and may very well be wrong) that it’s a tax matter that wouldn’t apply for funds held in an ISA?

    I’m interested if others also have experience of currency exchange fees in their ISA (either overt charges or hidden ones through shoddy exchange rates). If iWeb siphon off 1.5% on each transaction, then that’s more than the dealing charge above a few hundred pounds investment.

  • 2353 Jeff Beranek May 2, 2019, 11:25 am

    The ISA wrapper should hopefully restrict you to reporting funds anyway, but worth checking if you are looking at obscure overseas funds. AJ Bell have recently lowered currency charges to 1.00% (!), same as Hargreaves, lower fees for (very) large orders. With HSBC InvestDirect Plus you can have a US Dollar cash account. I’m not sure what rate you get for moving cash in and out of it though. Also, I’m not sure what ETFs are open to you (no funds). Even Interactive Brokers I think costs 1% to deposit cash ($50 minimum). Personally I’ve still got issues within an ISA because I’m a dual US/UK citizen, but that’s a whole other story!

  • 2354 Sparschwein May 2, 2019, 11:48 pm

    Interesting – I’ve got an account with IB through a German intermediary, and the currency charges are only 0.4 basis points.
    Recently they pulled the plug on all non-European ETFs & ETCs for retail investors with obscure references to Bafin and Eu regulations, typical IB nonsense. So I was looking for an all-dancing new ISA to fill the gap, but without the currency charges.
    I’ll check HSBC, thanks. US investors have it better don’t they…

  • 2355 Adrian May 3, 2019, 2:58 pm

    My ISA this year is with Trading 212 – free share dealing and FSCS protection. The range of shares and ETFs is limited – particularly investment trusts – but there’s enough there to make it workable.

  • 2356 londoninvestor May 4, 2019, 1:25 pm

    Re footnote 9, II’s “one free trade per month” on the basic plan is actually £7.99 of trading credits. So you could spend it one one standard trade, or alternatively on 8 regular investment trades…

  • 2357 IvanK. May 8, 2019, 8:53 am

    @londoninvestor,

    True, but each free trade expires after 90 days. Previously, ii’s £22.50 quarterly charges were valid as free commission up to a max £90, so 12 months. Under ii’s current price structure (which changes 1st June) one might have done nothing but hold for over 11 months, then still redeem all charges over subsequent weeks. Now in a protracted market downturn where investors & traders may wish to do little more than hold, it’ll cost ii’s less active clients significantly more.

    Occasionally, severe market downturns can last for well over a year. For holders only, that’ll cost almost £120 a year with ii’ new minimum charges. Just a few years like that & costs mount up. Compare that with Hargreaves Lansdown if holding a regular share account, or discount brokers like iWeb & X-O. Zero added charges.

    I see no justification for ii’s latest price hike. Their service is no better. No surprise if they see another exodus of less active clients with this ill-judged move.

  • 2358 rodcorp May 8, 2019, 9:05 am

    The fact that it’s not easy for many ii customers to work out whether they’ll be better or worse off could also be a factor. I believe clarity in pricing, low pricing, and ease of use are valued by younger retail investors. I’m waiting for Freetrade to add a Sipp wrapper, and then planning to transfer from ii.

  • 2359 IvanK. May 8, 2019, 10:39 am

    Rodcorp,

    I agree. Unless one has surplus free cash to keep trading most months, for many ii customers the new tiered pricing structure needs careful consideration. Someone like me may trade a few times some months, but then do nothing but hold for well over 6 months other times. That’s happened a few times due to unfavourable economic macro-factors.

    To get a clear benefit from these changes one needs to trade at least twice monthly. That’d cost £17.98 from 1st June instead of £20 now, as ii will drop commission from £10 to £7.99. So: we pay £9.99 monthly charge, use one commission-free trade & pay £7.99 for another = £17.98. That’s fine, but only as long as one is active most months.

    I suspect that many ii customers are investors who only occasionally add to or reduce their positions. Many have investments of well under £50K. Under ii’s new price hikes they will be net losers. Over a few years they’ll be a significant 3-figure sum poorer, with no improvement in service. IMO, these changes are another own goal by ii.

  • 2360 PeteA May 8, 2019, 3:50 pm

    II new pricing structure will suit some but not others. I doubt many platforms will reduce their pricing structures as recent changes have,in general, been upwards.
    Never had issues with II and if you are in accumulating mode then buying via the regular investment at a cost of £0.99 is pretty decent and then use the credit to sell at some future point in time.
    Comes down to personal choice.

  • 2361 IvanK. May 8, 2019, 6:26 pm

    PeteA,

    Indeed. Via ii’s site, one can change to a higher-priced plan suited to doing more trades at only £3.99 commission & then back to a lower-priced plan the next month if expecting a quieter period of much less trading. That flexibility seems very handy. So it’s by no means all bad.

  • 2362 Don May 28, 2019, 6:25 pm

    @Sparschwein,

    Any luck getting those US-domiciled ETFs? I’ve run into the same problem, not just with IB. I can’t buy those ETFs anymore nor add to the ones I’m already holding. Really annoying. I think I read somewhere that there was new regulation that essentially prevents European investors from buying US-domiciled ETFs.

    What’s been your experience?

  • 2363 Ph8l May 28, 2019, 8:22 pm

    I’m with ii and hl. Both I think are fairly good value. Especially if you have a mid sized account and moderate frequency trader. Ie 100k plus account and say 5 to 10 trades a month. On such things a good fill on an order can save you more than any trading fees!

  • 2364 SBS May 29, 2019, 3:17 am

    To be picky: shouldn’t HSBC Invest Direct be under “Share dealing brokers”, not “Flat fee brokers / platforms”, since they don’t do funds?

  • 2365 Sparschwein May 29, 2019, 10:16 pm

    @Don,
    I haven’t found a solution either, so far. Unlike IB, many UK brokers charge 1% – 1.5% fx fees which rules them out for US ETFs anyway.

  • 2366 Jeff Beranek May 29, 2019, 10:30 pm

    You can buy US domiciled ETFs if you open a brokerage account in the US. However, you would still have currency charges to get in and out of a USD account, you would still want to avoid non-reporting funds, you would have to file a US tax return (not easy) and you are likely to require a large amount of initial cash to open the account. I’m a dual US/UK citizen living in the UK and file a US tax return anyway, but I still prefer to use brokerages in the UK.

  • 2367 Don May 30, 2019, 11:14 am

    Thanks Jeff. I think you’re right and this is the only way for European investors to buy US domiciled ETFs. Something changed in the regulation between now and about a year ago.

  • 2368 Theta May 31, 2019, 10:08 am

    You won’t need to file a US tax return, only a (very simple) W-8BEN form once every two years. FX charges can be mostly mitigated by using services such as Revolut, transferwise, etc

  • 2369 Theta May 31, 2019, 10:16 am

    You won’t need to file a US tax return, only a (very simple) W-8BEN form once every two years. FX charges can be mostly mitigated by using services such as Revolut, transferwise, etc. Also, by using US ETFs you can save the 15% L1 withholding tax (reclaim it against UK tax)

  • 2370 Jeff Beranek May 31, 2019, 10:31 am

    @Theta – apologies, you are correct that you do not necessarily need to file a US tax return (just the W-8), although filling a return, depending on your situation, could actually reduce the US tax paid further. This is likely not going to be worth the hassle for most people. Also be aware of the USD60,000 estate tax threshold for non-resident aliens (i.e. non US citizen and UK resident) on US situated assets.

  • 2371 Genghis June 1, 2019, 7:53 am

    Relative newbie here but how easy is it to switch brokers whilst minimising time out of the market?

    My wife and I are currently buying a number of Vanguard funds and ETFs using Vanguard Investor. I like the no transaction charge approach.

    However, long term, the 0.15% platform fee will start to get expensive vs a fixed fee broker.

    Does anyone know which fixed-fee brokers allow in-specie (non-cash) transfers of Vanguard funds and ETFs?

    I’d then like to continue paying into Vanguard Investor on a monthly basis. Does anyone see any problems with this approach?

    Many thanks in advance.

  • 2372 uxr June 1, 2019, 9:19 am

    Genghis, no problem with this. I do the same:
    regular purchases on one platform then a yearly move out to iWeb to save on platform fees.

    With in specie you’re not out of market so no problems. Make sure the math works tho (produces savings even after exit fees) and call both providers that they are happy with such a move.

  • 2373 IvanK. June 1, 2019, 1:07 pm

    Genghis, How long depends on the efficiency of both brokers. If the one you’re leaving delays matters, then the one you’re transferring to can do little about it. So it can be anything from the general standard of about 2 to 3 weeks to over 4 months. That’s according to customer reviews for various brokers on sites like Trust Pilot.

  • 2374 Sparschwein June 1, 2019, 2:21 pm

    By the sounds of it, a US broker is a valid option for UK-based ETF investors then; or perhaps even the better option, due to the 15% withholding tax reclaim that Theta mentioned?
    Does anyone have experience with this, as a UK resident without any other ties to the US?

  • 2375 Jeff Beranek June 1, 2019, 3:06 pm

    @ Sparschwein : Only if you are happy to miss out on the 0% withholding tax on dividends of Irish domiciled US funds held in a SIPP, 0% capital gains tax, and no exposure to US estate tax. Is it really worth the very slightly lower fund expenses on the handful of HMRC reporting funds available in the US?

  • 2376 Theta June 1, 2019, 4:28 pm

    @Jeff
    Regarding tax, I was referring to L1 tax leak, which the Irish funds suffer as well, and you can’t claim it back. In most cases it’s a wash but in case of US index trackers (and global ones that contain approx 50% US stocks), you are better off with a US fund. To illustrate:
    Holding of $1000
    Dividend of $20
    L1 tax: $3
    US fund pays investor a div of $17. Investor claims the $3 against div tax paid in their UK tax return.
    Irish fund pays the $3 tax internally and pays to end investor a div of $17 but with no credit to reclaim.
    This is a wash in case of funds that don’t have US stocks, or investors that don’t have any UK dividend tax liability to use the foreign tax credit against, in other cases, US funds are preferable (and even more so if you consider the lower TER they generally have).

    Regarding capital gains tax, how are Irish ones 0%? AFAIK it is the same as any, i.e. 20% for amounts beyond the annual personal allowance.

    Regarding US estate tax, I think the US-UK tax treaty helps. From what I’ve read, it may need a form to file but other than that there won’t be any US tax liability as all assets would be considered as part of the UK estate only.

    Disclaimer: I am not a tax advisor but have done extensive research for my own affairs and have periodically decided to have everything (outside ISA and SIPP) in US accounts with US funds (basically the vanguard ones, that are UK reporting compliant and have the cheapest or close to the cheapest TER).

  • 2377 SandPiper June 1, 2019, 4:52 pm

    I’m curious as to what platforms any dual UK/US citizens invest into. I have less then £20K I want to invest (to avoid filing PFIC for now) and so far I have been looking at Close Brothers as a possible option and taking some advice from the list here:
    https://www.reddit.com/r/UKPersonalFinance/comments/b87a7o/ss_isa_for_those_with_american_citizenship/?st=jwdmtwhx&sh=2b94e033

  • 2378 Jeff Beranek June 1, 2019, 6:00 pm

    @Theta, it is my understanding is that there is no capital gains tax within a SIPP (or ISA), whereas a US brokerage would be outside a SIPP or ISA. US shares sold and shares churn within funds in a US brokerage will be exposed to CGT in US and/or UK. It is also my understanding that US domiciled funds or shares in a US brokerage are assessed for estate tax in the US because they are regarded as US situs assets by the IRS. I’ll step back from this debate because it looks like you are unconvinced by my arguments.

  • 2379 Theta June 1, 2019, 6:45 pm

    @Jeff
    Please don’t take the fact that I am unconvinced as unwillingness to be convinced. I do appreciate and in fact welcome any challenge on these matters because I could be wrong.
    I agree that within ISA there is no advantage for US ETFs, and in fact there are additional costs for FX conversion. And if someone doesn’t fully utilise their ISA allowance, it’s not worth investing outside an ISA with a US broker, they are better off topping up the ISA instead.
    Within a SIPP though, the previously mentioned 15% withholding saving applies in full (there isn’t even withholding in the first place of the setup is correct).
    On the other issues you mention, my understanding is that:
    A. the extensive usage of “heartbeats” as well as the favorable ETF creation-redemption mechanism manages to completely avoid US CGT within the fund for Vanguard US ETFs anyway.
    B. Shares churn within the fund has no UK tax implications for the end investor (assuming UK reporting fund, which most if not all vanguard funds are)
    C. They are indeed US situs assets, but if the deceased is UK domiciled for IHT purposes, then the executors can claim the US UK tax treaty and avoid US IHT altogether (at the cost of filling a form I guess).
    Again, please don’t step back from the debate as your input is very valuable. I insist not in order to “win” the debate, but to make sure that if there are any holes to my thought process, they are exposed.

  • 2380 Jeff Beranek June 1, 2019, 6:47 pm

    I’m dual US/UK. I know for certain you can hold a SIPP with AJ Bell and many others. ISAs are more difficult. Note that even if the platform allows you, you still need to avoid funds/ETFs not in a SIPP. But if you are happy to report all dividends (including any “qualified dividends”) and capital gains taxes manually to the IRS, then I know for a fact you can use iWeb and HSBC InvestDirect. I think you can use HL, iDealing and Halifax.

  • 2381 IvanOpinion June 1, 2019, 8:52 pm

    @Jeff @Theta
    I think Theta might be right about US estate tax. Under article 5(1) of the US UK estate tax treaty, the estate of a person who is solely UK domiciled and is not a US citizen is only taxable in the UK. There are exceptions for certain US situs assets, but not ETFs.

  • 2382 Jeff Beranek June 1, 2019, 9:04 pm

    @Theta – On point C, after futher research, my understanding is that US shares are US situs for US estate tax, but not for US gift tax . Yes, it appears you are right that you could avoid the lower non-resident alien US estate tax threshold by filing a US estate tax return, however you would then need to declare your worldwide assets as if you were a US domiciliary. This would only get complicated if your worldwide assets exceeded the full US estate tax threshold (currently $11million, but could drop back to $5.5million).
    On point B, it appears that 65 Vanguard ETFs and 1 Vanguard Index Fund are listed by the HMRC as both US domiciled and reporting. The Vanguard USA website lists 59 ETFs and 129 mutual funds. Unfortunately, there appears to be a mis-match between the two lists of ETFs. A quick look at etfdb.com shows that are at least 80 active Vanguard ETFs. So you would need to be very careful that the Vanguard fund offered by your US brokerage corresponds exactly with the CUSIP of a fund sanctioned by the HMRC. Also, every year you would need to check if there was any “excess of reportable income over distributions” to declare on any shares held (over the reporting periods that you held them). This requires referral to the horrible document “https://advisors.vanguard.com/iwe/pdf/TIDQAUK.pdf”. Blurgh. I’ve reached this stage in my research before and just gave up the will to live…

  • 2383 Don June 3, 2019, 12:10 pm

    @Theta
    Regarding your comment about the 15% withholding tax not charged in a SIPP you’re right in theory. But do you know for sure of any broker that currently lets you buy US-domiciled ETFs in a SIPP? I remember asking AJ Bell about this around a year ago and being told that, unfortunately for the time being, they weren’t able to offer ANY US-domiciled ETFs due to compliance issues. Something to do with KIIDs, if I remember correctly.

  • 2384 Jeff Beranek June 3, 2019, 12:39 pm

    Correct, no US domiciled funds in an SIPP and probably soon also not in any UK or European brokerage. It’s easy to get ETF-envy by looking at US options, but there are a very wide range of low cost funds available in the UK. I’m not going to lose sleep over a few basis points.

  • 2385 Theta June 3, 2019, 2:05 pm

    I do. I have been using Interactive Brokers for my SIPP and I can confirm that I have had no withholding tax on dividends paid.

  • 2386 Ivanopinion June 3, 2019, 3:30 pm

    US Estate Tax

    Just to flesh out my comment 2381, the relevant double tax agreement is on this website:
    http://www.legislation.gov.uk/uksi/1979/1454/made

    Under that agreement, the basic rule on country taxing rights is:
    “ARTICLE 5 TAXING RIGHTS
    (1)(a) …if the decedent or transferor was domiciled in one of the Contracting States at the time of the death or transfer, property shall not be taxable in the other State…”

    Decedent is US legal jargon for deceased person. So, if the deceased was only UK domiciled at the time they died, the basic rule is that the US cannot impose estate duty, even on US situs assets.

    This rule does not apply if the deceased was, at the time of death, a US national. (Art 5(1)(b)) So, Jeff may not be protected from US estate tax, but most Brits will be.

    There are exceptions which mean that the US could still tax US real estate (eg, Florida holiday home) or US assets of a business the deceased carried on in the US. But investments in ETFs would not come under either exception.

    There are a few other exceptions to the general rule, relating to assets held in trust or where the tax in the country of domicile is not paid, but these would not seem relevant.

    Obviously, the only way to know for sure is to get advice from an expert, but it certainly looks like a UK citizen, domiciled in the UK, holding investments in US ETFs or shares would not normally be exposed to US estate tax.

  • 2387 Jeff Beranek June 3, 2019, 4:08 pm

    I have a copy of the 768 page book called “Guide to US/UK Private Wealth Tax Planning”, 2nd Ed, by Robert L Williams costing £100. Unfortunately, it’s almost as unreadable as the original set of tax treaties, but it does appear to confirm that a non-US person, UK domiciliary would not be subject to the reduced threshold for US estate tax, but it does state that they would need to file a US estate tax return (on death of course) on their entire worldwide wealth to benefit from this exclusion. As I said, this shouldn’t be a problem for most people, but just a warning.

  • 2388 Don June 3, 2019, 4:56 pm

    Thanks Theta. But have you been able to add to these US-domiciled ETFs over the last year? As I said, I’m holding a few myself but lately haven’t been able to add to them anymore.

  • 2389 Theta June 3, 2019, 5:35 pm

    Yes, I have.
    But it is true that following MiFiD 2 access to US ETFs was restricted, and I had to be classified as professional as opposed to retail client in order to maintain access. To get this classification you need to have 2 out of 3 requirements:
    1. Have done 10 or more trades in relevant products in the last year
    2. Have account size of >€500k.
    3. Work in the financial sector.
    This was the case last year anyway. The situation is very fluid so you may want to contact them to ask whether something has changed.

  • 2390 Theta June 3, 2019, 6:13 pm

    Requirement 1 above is actually 10 trades per quarter on average for the last year.
    And requirement 3 is to work or have worked in the past in the financial sector for at least a year.

  • 2391 Genghis June 6, 2019, 4:50 pm

    Another newbie question, apologies:
    I’m looking to tidy up my wife’s pensions and transfer into a SIPP. I’d like to “own the world” and keep costs as low as possible. Can someone advise on their own strategy of the cheapest way to “own the world” in a SIPP, taking into account account fees (perhaps using the fixed rate for ETF brokers?), trading fees (perhaps only a couple a year) and the relevant OCFs? Thanks in advance

  • 2392 stephen watson June 6, 2019, 5:42 pm

    I did this a few years ago for my sips and it slowly evolved into what I have now, which I am happy with. I own 100% the Vanguard etf VWRL. It’s a tracker which covers the whole of the developed world and includes the non developed world and it’s fee is 0.25%. If you just want the developed world VEVE is slightly cheaper. As I am adding to it each year I just add when I reinvest my dividends. If you are going to do neither you could pick an accumulator etf. Blackrock have one SWDA if my memory is correct.
    For the platform I currently use Fidelity which caps fees at £45 per year which is a bargain if you have a large holding. However customer service is awful. Before that I used AJBell which was good and I think was £200/year.
    The best book I found to help me is by Lars Kroijer
    https://www.amazon.co.uk/Investing-Demystified-investment-portfolio-Financial/dp/1292156120/ref=sr_1_1?crid=1M4ALPBTP03RW&keywords=lars+kroijer&qid=1559839192&s=gateway&sprefix=lars+k%2Caps%2C166&sr=8-1

    By the way I’m not an expert and investing 100% of a SIPP in the stock market is considered to be very risky.

  • 2393 SBS June 8, 2019, 6:11 pm

    It depends on the size of the SIPP. For a relatively small SIPP, you’ll be better off avoiding all fixed charges (both annual charges and dealing charges), by going with either Cavendish Online or Close Brothers, both of whom charge 0.25% per year for the platform, and holding funds rather than ETFs (to avoid dealing charges).

    The cheapest global equities fund i know of is Fidelity Index World (Class P), which has an OCF of about 0.13%, making total costs 0.38% per year.

    However, that Fidelity fund doesn’t include emerging markets (which are currently around 10% of available world equities). If you prefer a fund that does include them, you could instead use HSBC FTSE All-World Index (Class C), which has an OCF of 0.19%, making total costs 0.44%.

    Alternatively, you could include emerging markets while keeping costs down a fraction by putting about 90% of your money in that Fidelity fund, and the other 10% in an emerging markets fund, such as Vanguard Emerging Markets Stock Index Fund, which has an OCF of 0.27%, which would give you an average OCF (calculated as 90% of 0.13% + 10% of 0.27%) of about 0.14%, making total costs 0.39%. However, using 2 funds instead of 1 does add some complexity, so beware!

    Now, for a larger SIPP, you *may* be able to save money by using a fixed-price platform, or ETFs instead of funds. But first figure out your total costs for that approach (platform charges, fixed or percentage + dealing charges + OCFs), to see whether it really is cheaper than the percentage-fee-platform method (which, by the above calculations, might cost around 0.38% or 0.39% or 0.44% per year, depending how you do it).

  • 2394 Kraggash June 9, 2019, 8:03 am

    With respect to charges, Youinvest issue an annual statement of the totàl charges you are paying for each holding, and the total % charge overall for the portfolio. This is not for just Youinvest charges, but the fund and IT mangers’ charges as well.

    It is quite interesting, especially if you are trying to cap platform charges by using ITs instead of funds…….

  • 2395 Aidan Williams June 12, 2019, 6:01 pm

    @Kraggash Thanks for that, I ignored it (Youinvest Portfolio annual costs and charges statement) thinking it was just an annual valuation which seems to have disappeared this year. It certainly is a useful and interesting document which makes me wonder why they have produced it. Regulatory requirements?

    Apparently my investment returns where 0.6% more negative than they would overwise have been. :-/

  • 2396 Kraggash June 12, 2019, 6:18 pm

    Well, looking down my list, I find (if I am reading it correctly) that some of the highest total annual charges (that is platform plus fund/IT manager charges) were actually from Investment Trusts, rather than Funds.

    So maybe they are gently pointing out that, if you are moving to ITs to reduce your platform charges, you may not be actually saving money…

  • 2397 Daniel June 18, 2019, 11:03 am

    Hi I am looking to establish a passive investing strategy focusing on ETFs. I have a relatively large AuM (1m) and was looking for a broker that would allow investing in multiple currencies but that was also easy to use.

    Which one would you recommend?

    Thank you

  • 2398 Jeff Beranek June 18, 2019, 2:52 pm

    @Daniel – Investing in ETFs in other currencies will mean you need to be aware of the “HMRC reporting funds” issue, there is a good article on Monevator about this. You’ll want to avoid non-reporting funds and you will need to manually calculate any excess reportable income, because chances are you will not be able to hold the ETF in a SIPP or ISA in a foreign currency. Do you really need to trade in foreign currencies? Are you buying invidivual shares? Do you have lots of currency already held in other currencies? If so, chances are that the rates offered by the likes of TransferWise will be better than that offered by any banks or brokerages. There’s already been a debate on this forum of the pros/cons/warnings of opening a US brokerage account. By holding globally diversified ETFs will mean you are already exposed to many currencies, even though the fund may be listed in GBP (or USD). All the earnings and values of the constituent assets are already baked into the price and distributions.

  • 2399 David July 3, 2019, 12:29 pm

    Idealing.com should be included in your comparison. I find them reliable and very fair.

  • 2400 Gally July 4, 2019, 12:02 am

    Can we identify which if these platforms allow a discretionary trust account and at what cost.

    Ideally I would like a platform that also generates tax calculations for capital gains on disposals tax on notional income and hopefully distributions to beneficiaries.

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