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Broker Platform Recommendations for UK investors for investing in international stocks as well as UK
Hi all,
Newbie here, looking to set up a portfolio, was wondering if anyone can recommend a platform which allows for international investing at reasonable prices.
Thanks for your time.
Regards
J
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37 comments
FreeTrade and T212 are good for small accounts as it's a pretty easy to use platform but they can become quite limited on product line up when you go beyond the main US stocks. For much greater range of stocks, then I'd suggest using Mitto Markets. Loads of products available and $4 a trade, but much better prices (commissions free platforms will increase their spreads to make up for the lack of commission).
IG is also a good platform too, but impossible to get hold of anyone on customer service.
I use Ig Group (LON:IGG), it can be difficult to get through to customer services, not that I have needed to recently but back about 6 months ago I did and it was taking about 1 hour before anyone answered, at least it is free call unlike HL. Ig Group (LON:IGG) had a few problems back in March but so did HL and others but since then the platform has worked pretty well.
Ig Group (LON:IGG) costs on US stocks is only 0.5% forex fee as long as you do 3 trades on any stocks (UK etc.) in the prior month. Costs on European stocks are higher. I think £10 plus 0.5% forex. They also don't cover some countries such as Scandinavia.
I've considered IG but this to me is a stumbling block ''Ig Group (LON:IGG) costs on US stocks is only 0.5% forex fee''. Can you keep a float in USD, for example, or do you have to convert from/to GBP on each transaction, in which case 1% for a round trip is expensive. DeGiro, say, is much cheaper and allows floats, though their spreads on UK small caps often seem poor. (Note: I'm aware that ISA rules don't allow FX floats.)
I only use an ISA. I'm not sure on their share account but I don't think you can hold $s.
If doing a lot of US trading, I would be looking at Charles Schwab share dealing account, low fees and money held in US$s but no ISAs.
If you want a cheaper way to trade US shares, you may want to consider spreadbetting.
I've been spreadbetting US stocks for over 4 years now and I've never looked back. You can place your bets in GBP which means you don't need to convert your capital into US$ to make the trade. This means no forex fees or exchange rate risk.
On top of this, you don't pay any commissions or taxes and because spreadbetting is considered "gambling" under UK tax law, all spreadbet profits are tax-free (unless it's your sole source of income).
The catch is that you may have a slightly higher spread compared to the underlying exchange. However in liquid shares, this practically non-existent.
Furthermore, you may need to pay a daily fee to keep your positions open overnight (DFB contract). Over the last 4 years, this has only amounted to 2% of my account per annum. So considering the benefits of not paying commission, forex fees, taxes and exchange rate risk, this is pretty good!
It takes a bit of time to get your head around it, but once you do it is the most cost efficient way to trade, in my opinion (not just international shares, but UK shares too).
One thing I'm not sure about on spread betting is dividends, how are these handled on US shares? Do they have US tax deducted?
How about UK tax on dividends?
Also I don't understand this "all spreadbet profits are tax-free (unless it's your sole source of income)."
You don't earn dividends as you don't own the underlying asset
And "sole source of income" means you are classified as a professional investor by HMRC.
So best to buy shares "ex dividend" then? Or shares that don't pay dividends.
Looking at some of US holdings I will be losing around 0.6-0.8% dividend.
I'm a bit confused by this IG statement "With CFDs and spread bets, we make an adjustment on equity and stock index positions if a dividend is paid."
CMC make a bit clearer: "
Dividends
When a stock goes ex-dividend, the value of that stock effectively falls by the dividend amount. This means if you hold a spread betting position in a company and that company announces a dividend, your account will be credited or debited on the day the stock goes ex-dividend.
If you were long, you would have been disadvantaged by the drop in the market caused by the pay out of the dividend, so we would credit your account with the dividend amount, less any applicable dividend withholding taxes. If you were short, you would benefit from the drop in the price, so the equivalent amount would be deducted. So, overall, you don't lose or gain anything from the adjustment. There are no withholding taxes on short positions."
Hi RayStraw.
I think you’ve answered your own question with the text from CMC. With a spread bet, the bookie, e.g. CMC, adjusts the price of the underlying stock to “credit” you with the dividend value (assuming you have a long position) on the grounds that when a stock goes ex dividend it’s value (the reference price for the bet) will fall by the amount of the dividend being paid. Net, net, you should be no better/worse off pre or post dividend. Say you had a bet on the price of Vodafone at 130p with a dividend due of 5p. Pre ex dividend date, the reference price is 130p. After it goes ex dividend the share price in the market would fall by 5p (until some other factors make it move again) to 125p but you will get a credit to your account of 5p to neutralise the effect of the dividend. One implication of this is that you get the credit for the gross dividend on the spread bet whereas if you owned the underlying share you could be liable to pay tax on this.
Hope that makes sense.
Gus.
Yes but I only found that info.
But reading elsewhere some are saying you get the net not gross dividend. So in UK I would be worse off as I don't pay tax on dividends.
My question was really about US shares, how are they treated, do you lose 30% due to tax?
A spread bet is just that, a bet. You don’t own the underlying shares but are betting on the difference between the price at which you make the bet and the price at which you close the bet multiplied by the amount you stake per unit price movement. Hence no currency issues as you can make a bet denominated in £ against a share denominated in anything providing its on a transparent market and has a numerical value.
The tax position is as for any other bet, i.e. no tax on any wins so no “CGT” type consideration. The corollary of this is that you can’t offset any losses against tax - income or otherwise. I guess the logic for this is that given something like 70% of spread bets lose money it’s in HMRC’s interest to keep it outside of the tax regime as the net inflow to them would be negative if they introduced a symmetrical tax gains/losses treatment.
Gus.
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As Gus as brilliantly explained, the "dividend" isn't really a dividend because you don't own the underlying asset. It's an adjustment made to your account and treated as a betting profit (or loss if you are short). There is no special tax consideration, under UK law, for these adjustments via spreadbetting. In other words, both profits made from "dividends" and capital appreciation are tax free*.
Also I don't understand this "all spreadbet profits are tax-free (unless it's your sole source of income)."
From my understanding, UK law states that if you consider yourself a professional trader, investor or market maker, then your spreadbetting activities would be subject to income tax.
Note: it's not capital gains, as you don't own the underlying asset.
So in other words, if you want to go full-time, you need to pay tax.
However, if you get a part time job, lets say, stacking shelves in Tesco two days a week, and you pay income tax on this job (i.e you earn over the tax free allowance of £12,570 p.a.), then you can declare yourself as a supermarket assistant to HMRC. This is now considered your main source of income.
As a result, they would treat all your spreadbetting activities as gambling and therefore wouldn't pay tax.
So, in order for this to be truly tax free, you will need to have another source of income that you pay tax on.
Disclaimer: this is just my personal understanding and not tax advice. Best to speak to a professional and all that, first!
I see, thanks. I'm retired, so don't earn apart from interest on savings. I don't pay any tax as income is under my allowances and most is within ISAs, so a spread betting account for me could be a problem.
Freetrade, last time I checked, orders weren't executed before 10am (!!!), which is a nice little kickback for their market maker...
Hi all. Can I ask if anyone is using IG for their SIPP investments? All I can establish is that an IG SIPP is administered through James Hay, though I can find no mention of IG as an 'investment manager' anywhere on James Hay's website. IG's own website has just a few references to their SIPP - and clicking them generally takes me to a hopeless page titled 'How can we Help?' Curiously a google search for IG SIPP throws up several helpful-sounding questions - but they all take me to this hopeless Help page. (I also found a couple of posts on their 'Community' page but no useful information.)
So it's not at all clear how one would even set up an IG SIPP - do you start the process with JH or with IG themselves. I should say that I'm attracted by IG's platform/range of securities but the involvement of JH is a negative for me based on other experience.
It seems to me that neither party really wants to promote their joint SIPP offering. If anyone has had a happy SIPP experience with IG I'd be delighted to hear - ideally with an idea of how one starts the process.
Thanks
Been using IG now for about 6 weeks, there was a problem about 4 weeks ago when the US markets opened, could not trade for about 1 hour on any market, since then it has been fine.
The fees are low compared to HL, as I did 3 trades in January, now all my trades are £3 on UK shares and free on US shares but there is a 0.5% forex fee.
One good thing is if you put in a low limit price this can often get filled or partially filled, this would never happen on HL. I will still keep some with HL as IG does not have good European coverage and does not do funds.
So I'm reasonably happy with IG so far, only issue is moving some of my cash from my HL ISA S&S account, I did the form yesterday, so we will see how that goes.
I see Trading212 is not opening new accounts as it's been snowed under with applicants.
On the subject of IG I thought I would raise something I haven't seen it mentioned anywhere else on Stockopedia (although Twitter is alight on the subject.)
I believe that this applies to both CFD's and Spread-bets.
IG are reportedly withdrawing from supporting a massive list of stocks (more than 1,000 I believe).
Essentially, for stocks on the list :
I am reporting all of this second hand, because despite having been a customer of IG for around two decades I have had no notification from the whatsoever as things stand. I do have positions in (at least) two of the stocks that they will no longer be supporting.
It is reportedly due to them being asked for more margin from the parties they trade with in the light of Gamestop, AMC etc.
Michael Taylor gives some good coverage of the issue here .
As it stands my IG positions currently represent a very small part of my portfolio, but I was planning stepping this up substantially over the next 12 months. That plan is "called into question" now.
With regards IG Group (LON:IGG) as an investment, I used to be long but closed out a while ago, but it could be a good short IMHO unless they can drag some reputation out of the ClusterF*** they have launched.
If they're demanding 100% margin on stocks, quite how they can continue to justify a financing cost on those going forward before they're closed will be interesting to see justified!
This is probably true for numerous brokers, but another benefit of IBKR that has saved me a few times: they cancel GTC stop loss orders and also limit buy order, after the close, if a corporates action ex-date is the next day. Handy for stock splits. Or big divs when the market is close to your stop or buy limit. They send an email advising the cancellation.
I should know when a 6:1 split is coming... but, sometime I don't. Too many portfolios spread across countries.
Gents,
Certainly not the cheapest by I recently opened up an II ISA since I am impressed with their larger range of North American stocks versus AJB,IG and even T212.
Was more focused on targeting specific names rather than costs.
Thanks, Spl183
But ii have a 1.5% forex fee which IMO is far too high. Not found any US shares, that I'm interested in, missing from IG but quite a few European shares are.
I use Trading212, HL, IB, Free Trade and Degiro. Mainly to have good coverage. Still missing warrants. Can anyone confirm dealing with warrants with your broker?
What company? I can check on IBKR
I don't know what an ISA is in the UK, so maybe these suggestions are disqualified, but Interactive Brokers is a very good global mkts solution. Dog of a platform and help desk though.
I like IB as it allows sub accounts for each country I invest in. And they can be funded and denominated accordingly. They also offer wholesale interbank FX rates, so just for general use it is great if you move funds between currencies and countries. I can also have sub accounts for different strategies, and move open positions between accounts. The customisable reporting functions are way above retail class as well. Really very good.
IB also offers CFD contracts on larger global shares. So you can very easily short or employ leverage on longs. Example: back in August 2020 I had run out of funds in my US account, didn't want to sell anything to raise cash, wanted to buy CROX, did so with CFDs, and am still long and up 90%. They don't re-quote either, you get the exact same price as the underlying.
Here is every product my account has access to for VOD, grouped by exchange. Different accounts have different access. eg, investor accounts wont have access to CFD products etc.
TSLA
The IB platform (TWS) is well known as poor (functional, but horrible to use). You can avoid it by opening a Trade Station Global account, which uses TS (nice!) but executes via IB in the background. Seems complicated with effectively two accounts, but apparently works well: TS front end/IB backend. TSG is not available in all countries. The TSG solution helps if you want to analyse [charts] and execute orders and report performance in the same platform. I don't... I analyse using TradingView (easy to use and pretty), and execute and report using IB. Apparently TV will this year allow execution via the IB platform. That will be huge. IMO Stockopedia should license their fundamentals analyses and screening to TV. The combo would be killer.
For the record, I really dislike dealing with IB. Their internal systems appear to be a mess, and staff offer a poor user experience. But they are almost a pro-level global platform, with retail access. And as a broker they (apparently) hold USD7bn in excess regulatory capital. People run small hedge funds using IB.
Saxo Bank also has good global and product reach, but high comms. Stock comms these days should be free or very low. For small transactions in some counties they charge around $10 a side!
I agree regarding IBKR. It is the most powerful platform out there but not recommended for inexperienced investors. I actually like their platform but take some time to get used to it.
You can also plug into it via their API...probably not of interest to most people. Hedge funds use IBKR via the API for example [I assume this is how Trade Station Global works with IBKR].
I used to use the Saxo platform but they had (and still have I believe) a custodian charge.
I have a trading account with Interactive Investor that allows me to hold funds in $US and Euros as well as others I've never used namely Singapore, HK, AUS and CN dollars.
I mostly hold US companies in that account. You only have to incur the costs to convert currency once and then can buy and sell with settlement in the foreign currency. That's not allowed in an ISA.
Of course having started small I'm now having to think how best to manage capital gains assuming Mr. Sunak is bound to target that for a tax rise. So no perfect solutions exist that I know of.
Yes I’m one who have opened an IG ISA account. At first it was fine but then there were problems for 3 days running when the US markets opened, however since then it has generally been ok.
It is a very basic platform but generally works ok and costs are low if you do 3 trades per month or more. Then the next month fees are reduced. Only done uk and USA shares so far. Some European markets are missing such as Scandinavia. Also they don’t do funds.
I would check out which markets they cover. I also use HL but their fees are expensive but they do have wider coverage.
Which markets do you want?
Thanks for your comment, IG seems the better option, looking for UK, US, EUROPE and CHINA.
Have you heard of degiro, fees looks low and good ratings on Trust Pilot.
I could be wrong, but I don't think Degiro do ISA's ?
That's pretty much a necessity.
Yes I have looked at Degiro but it does not offer an ISA, so for me it's a non starter. If that is not a problem then it seems ok.
I looked at Trading212 but don't I trust them from some of the reviews.
Re £IG for UK, most USA and some of Europe they are fine, not sure about China. You can do a demo on IG.
Quotes on IG are as good as HL or better sometimes.
Watch out for forex fees.
I had a look on Trustpilot, score not bad but 23% gave bad reviews, I would go through those and see what the issues are.
I would be a bit careful with reviews on Trustpilot, some companies request the good reviewers to do a review on Trustpilot, therefore you may get a biased selection, I think they are termed invited reviews, check Trading212.
I had the European subscription package on Stockopedia last year, but switched it to the US package because the majority of European small-caps on my shortlist were unavailable on Hargreaves Lansdown and IG. I didn't even find there to be a big difference between those platforms - IG maybe had the odd one which HL didn't.
Two examples are £LLN and £GOFORE. I couldn't get either last summer. HL said they could have added them faced with a request, but had stopped onboarding new stocks due to the pandemic and market volatility. Interactive Investor had Lleida but I couldn't bring myself round to opening an account and transferring funds just for one stock.
Someone mentioned Interactive Brokers (IBKR) on another thread recently. I downloaded the app and their demo account included both the stocks mentioned above, as well as most of the other European ones that HL and IG didn't have available. It is primarily an American firm, but seems to have excellent coverage so I'd try there.
On another note, I placed my first US trade a couple of weeks ago through HL and was very disappointed. Not just the £50 foreign exchange charge. It was a Nasdaq company with a $2bn market cap. When I went to submit the trade I got the following message:
'Before we can execute your order outside a Regulated Market or a Multilateral Trading facility we need your prior express consent going forward, to trade in this way. Are you happy to provide your consent for this trade and any future trades?'
This immediately brought to mind a dark pool where my order would be front-run by High Frequency Traders like Citadel. Sure enough, I was quoted a price about 1% above the offer price HL were quoting pre-trade. I intend to send a message to HL advising them that some of us have read 'Flash Boys' by Michael Lewis and I'll be using IG for US trades from now on!
Thanks for the information, i think i will stay away from HL, have you heard of Degiro (Good ratings on TP and low fees, wide range of markets)? Interactive brokers look good going to open a demo account to have a look.
A few on here have recently opened IG accounts, and I must say I'm very impressed with their costs. I opened the account to trade US shares, so not tried trading any other countries.
Their fee's are here this also shows the markets they cover.
The advantage for me is that after the first three trades (£10 each), the following month there is no commission to pay, keep making three trades a month and never pay commission again !! (commission free is US only, UK is £3 per trade at this point)
The only fee seems to be the FX charge when you open and close a position - this is 0.5% and lower than many other brokers.
It's only been a month, but I'm quite happy.
Thanks for the information :)
That's very good to hear.. I was so complacent with HL platform where I had SIPP and ISA together.. Given that the broker fee is expensive compared to others, I'll look in to IG demo and try to move out from HL soon.. Thanks again
I also have ISA's and a SIPP at HL, but these are mainly for IT's / regular income. I trust them to hold these for me rather than some smaller company, but there is no churn so minimum cost.
Horses for courses as the saying goes :-)