Our Pick Of The Best Social Trading Platforms

Copy trading is offered by only one of our selected platforms (eToro) and allows investors to replicate all of the currently-open trades of a particular trader.

Shares are bought in the same proportion as all of the open positions in the copied trader’s account, However, shares are bought at the prevailing market price at that time, not the price at which the copied trader originally purchased them. Any stop loss or other trading tools applied will also be replicated.

When the copied trader buys or sells shares, the same actions are automatically carried out in the copying investor’s account in real-time. Investors aren’t typically charged a fee for copy-trading as the platform will make money from the buy-sell spread on trades. Copied traders receive a fee from the platform.

The account opening process can usually be carried out online (or via the app) and may take as little as 10 minutes. The applicant will need to provide some basic information, such as bank account details, debit card details and National Insurance number.

Investors may have to supply further documents to support the verification of their identity, although these checks may be carried out electronically during the initial application process. When these checks are complete and funds have been received into the account, the investor is ready to start trading.

Investors can search by the company name or ‘ticker’ to select the shares they wish to purchase and UK shares can be traded from 8 am to 4.30 pm when the London Stock Exchange is open.

This depends on the platform, but many allow investors to open an account with as little as £1, or £25 per month (where platforms offer a monthly investment option). Investors will then need to add further funds to their account to cover the value of any share purchases.

We’ve looked at general trading accounts that allow you to buy and sell investments, however, there are a variety of tax-efficient alternatives.

We’ve also produced guides to our pick of the best Individual Savings Accounts (ISAs), Self-Invested Personal Pensions (SIPPs) and Junior Stocks and Shares ISAs (JISAs).

These accounts are types of ‘tax wrappers’, allowing you to pay no income tax on dividends and no capital gains tax on any profit made on buying and selling your shares. However, in the case of SIPPs and JISAs, you will not be able to access the money until you reach a certain age

Some, but not all, of the providers listed also offer ISA and SIPP accounts, as well as trading accounts.

There are various types of fees charged by trading platforms:

Share trading fee

This is a flat fee charged by a platform each time investors buy or sell shares. Some platforms do not impose a share trading fee and this is known as ‘commission-free’ trading).

Many trading platforms charge a flat fee of around £4-12 per trade. Trading fees are usually higher for US or other overseas shares.

Platform fee

This is an annual fee, sometimes called a custody fee, that’s charged for holding the shares on a trading platform. Our chosen trading platforms do not charge platform fees.

In terms of the wider market, some platforms charge a flat platform fee and others charge a percentage-based fee, typically 0.25% to 0.45% of the portfolio value.

There are two types of percentage-based platform fees:

1. Tiered fee: this is the most usual type of platform fee, whereby investors pay different fees on different ‘slices’ of their portfolio. For example, for a portfolio worth £300,000, investors might pay 0.45% on the first £250,000, then 0.25% on the next £50,000.
2. Non-tiered fee: a few platforms charge a non-tiered fee, whereby investors pay the same fee across their whole portfolio. For example, if an investor has a portfolio of £300,000, they might pay 0.25% on the entire £300,000.

These fees will usually be taken out of any cash held on the account or can be paid directly by debit card. If unpaid, a provider may sell shares held by investors to cover platform fees as a last resort.

Check which types of investments incur a platform fee as some platforms charge for holding funds, but not shares. Platform fees that charge for holding shares may be capped at a maximum annual amount.

Foreign exchange fees

Most platforms charge a foreign exchange fee when investors buy or sell shares denominated in a currency other than pounds sterling. Also referred to as a foreign currency conversion fee, this typically varies from 0.5% to 1.5%.

A small number of platforms allow investors to hold foreign currency in their accounts, enabling them to convert it once and use this money for buying shares (and holding the proceeds from selling shares) in the local currency.

Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin.

Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

Other fees

Some platforms charge inactivity fees and withdrawal fees (for accounts held in an overseas currency) and fees for trading by telephone.

Although not technically a fee, platforms also make money on the buy-sell spread on shares. For example, an investor might be looking to buy a share with a buy-sell spread of 100-102 pence. This means that they would pay 102 pence to buy a share, and receive 100 pence to sell a share.

Some platforms may offer more competitive buy-sell spreads than others, and less-traded shares, such as FTSE Small Cap companies, typically have wider spreads compared with FTSE 100 companies.

Tax treatment depends on one’s individual circumstances and may be subject to future change.  The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of tax advice.

You will be required to pay Stamp Duty Reserve Tax (SDRT) when you buy UK shares, calculated at 0.5% of the value of the transaction. This is not usually charged on buying overseas shares, although other taxes may be charged.

You may also have to pay capital gains tax if you sell the shares for a higher price than the price you paid. This is charged on the ‘profit’ (the gain you make) although the capital gains allowance is £3,000 for the current (2024-25) tax year – this means that you do not have to pay capital gains tax unless you make a total profit of more than £3,000.

In addition, you may have to pay income tax on any dividends received from your investments. However, as well as your personal allowance (£12,570 in the current tax year), you have an additional dividend allowance of £500 (in the current 2024-25 tax year).

As mentioned earlier, you do not have to pay income or capital gains tax on shares held in ISAs, SIPPs or JISAs.

A limit order is an order to buy or sell shares at, or better than, a specified price. So if an investor set a buy limit order at 100 pence, it would only be executed if the price was 100 pence or lower.

Similarly, a sell limit order is only executed at that price or higher. It can be a good way of trying to obtain a good price for the share trade without having to monitor the share price in real time.

A ‘stop loss’ can also be a useful tool to limit the downside exposure from investing in shares. This is an order to sell shares if the price falls to, or below, a level set by the investor.

A ‘trailing loss’ or ‘trailing stop loss’ sets the price based on a specified percentage above or below the share price, rather than a single value. It’s a useful tool to lock in profits or limit losses, without investors having to manually reset the stop loss when the share price changes.

Trading in US shares, investors pay the usual share trading fee and relevant foreign currency exchange fee.

They are also required to complete a W-8BEN form (valid for three years) which allows them to benefit from a reduction in withholding tax for qualifying US dividends and interest from 30% to 15%. Holding US shares also carries exposure to foreign exchange risk – if the pound strengthens against the dollar, the shares will be worth less in sterling (and vice versa).

As with UK shares, any profit on US shares will be subject to CGT, unless the shares are held in an ISA or other tax-efficient wrappers such as a self-invested personal pension.

When choosing a trading platform, investors should check the FCA register to ensure that the provider is authorised. This means that they have access to the Financial Ombudsman Service and the Financial Services Compensation Scheme (FSCS) if an issue arises. This will depend on what regulated activity the firm was carrying out and whether any exceptions apply.

The Financial Ombudsman Service will consider complaints against trading providers and may be able to resolve a complaint if the firm fails to deal with it properly.

The Financial Services Compensation Scheme will consider claims if a provider goes out of business and owes investors money. This only covers certain investment products, but where this applies the scheme can pay up to £85,000 per investor.

It’s worth checking the protection offered by the investment trading platform – some platforms are structured so that investments are held in ‘trust’ to protect them in the event of the firm running into financial difficulties.

History shows that investing in shares can potentially produce higher returns than cash-based investments.

However, a ‘buy and hold’ strategy is arguably a lower-risk option than regular day trading, especially where fees are charged every time an investor gets into or out of a stock. In either case, investing is never guaranteed, prices can go down as well as up, and investors may not get back their original outlay.

Investing in a diversified portfolio of shares via funds, investment trusts, or exchange-traded funds, may help to reduce an investor’s exposure to an individual company underperforming. Where doubts exist, seek professional independent financial advice.