Broker Platform Recommendations for UK investors for investing in international stocks as well as UK

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9th Feb '21 by jlynchhurst

37 comments 1650 reads

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

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Jlynchhurst

Premium Member

37 comments

Rusty2

19th Feb '21

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.

Wilbraham

21st Feb '21

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

Gromley

21st Feb '21

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 :

You can no longer open new positions.
Any open positions will move to a 100% margin requirement by the end of the coming week.
You will have to close any open positions within 30 days (or they will close them).

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.

dmjram

22nd Feb '21

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!

redbull001

19th Oct '21

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.

Rusty2

19th Oct '21

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.

Wilbraham

19th Oct '21

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.)

Rusty2

19th Oct '21

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.

Berkotrader

19th Oct '21

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).

mwjackson

19th Oct '21

Freetrade, last time I checked, orders weren't executed before 10am (!!!), which is a nice little kickback for their market maker...

Rusty2

19th Oct '21

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)."

mwjackson

19th Oct '21

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.

gus 1065

19th Oct '21

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.

Rusty2

19th Oct '21

deleted

Rusty2

19th Oct '21

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."

gus 1065

19th Oct '21

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.

Rusty2

19th Oct '21

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?

Berkotrader

19th Oct '21

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!

Rusty2

19th Oct '21

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.

Alphaflight

20th Oct '21

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.

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Broker Platform Recommendations for UK investors for investing in international stocks as well as UK

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Jlynchhurst

37 comments

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