Best Way to Buy US Stocks in the UK: A Guide for Beginners

If you’re considering buying US stocks from the UK, there are plenty of options available to you. There are more opportunities for trading in US shares here than ever before, and you really do have the internet and app culture to thank for that. In fact, it’s never been easier for you to trade in stock from all over the world, all from the comfort of your mobile device.

In this guide, I’m going to focus solely on the best options to buy US stocks in the UK, meaning that if you have your eye on a few big opportunities across the pond, you’re going to want to read on.

Buying US Stocks in the UK

Buying US shares from the UK is not only possible, it’s also really easy to get started. What’s more, there are plenty of great reasons why you should.

The US is home to some of the biggest and most diverse stock options on the planet. Everyone turns to Apple when their big Autumn reveals come around. Not to mention some of the biggest entertainment stocks on the planet, either – Amazon, Netflix and Disney are hugely viable and popular options.

Benefits of Buying US Stocks & Shares

All signs point towards fantastic diversity for your portfolio. Most people looking to buy American stocks will do so for the fact that you can only get so much from a British or continental portfolio. The US is a massive playground for stocks and options, meaning that you really are opening up the playing field.

When you look at the market size in the US compared to the UK and the rest of the world it’s clear to see that if you don’t have access to the US markets then you are missing out. Look at the mighty NYSE for example – making up a whopping 31.5% share of all stock markets worldwide. Then there’s another US giant – the NASDAQ – which makes up 14.5%. Compare that to the LSE in the UK with just 3.5%. If you want a truly diversified stock portfolio, you need to be involved in the US markets.

Plenty of online brokerage services and platforms will tell you, too, that you can expect a fantastic return from plenty of US options. For example, let’s head back to Apple. Apple TV is riding high right now, and the company never fails to innovate. Their stocks and performance on the stock market in general is always exciting – and worth holding on to, it seems. A $100 investment in Apple when the company first sold shares to the public in December 1980 would today be worth over $65,000. Now there’s food for thought. 

Tax Implications for US Shares Purchased from the UK 

Of course, tax is always going to come into play with share dealing. Ultimately, some of the money you make from shares is likely to fall prey to income tax or capital gains tax – meaning it is well worth enquiring with HMRC regarding how international share income actually works when it comes to declaring such payments on your yearly return.

However, you should also be aware that tax will, naturally, apply at the US side of things, too. The IRS may apply taxes to your stocks and shares should you take them away. However, the first thing to do before you start buying shares from the US is to fill out a W-8BEN form. 

This will effectively let the IRS know that you are buying from abroad, and that you will be subject to your own income tax laws. In fact, filling out a W-8BEN form correctly may actually reduce the total US tax you pay by up to 30%. Buying US stocks in UK circumstances doesn’t mean you have to pay everything the IRS demands of you.

How Many US Stocks Are There?

At present, there are around 7,000 different companies publicly listed across the US markets. Naturally, you have Google, Amazon and the likes – but if you look back in time, it’s clear to see that there were many more companies listed on the exchange looking back as little as 20 years ago.

There are plenty of reasons for this – not only has the US economy changed hugely since then, there have been massive changes in terms of mergers and company breakdowns. Don’t take the lower figure for negative, as the economic landscape is always changing.

How to Buy US Stocks from the UK

Let’s consider a few simple steps you need to keep in mind when getting started with buying US stocks from the UK.

1. Consider your investments. Are there any companies or stocks which particularly appeal to you? It’s worth doing your homework, as even the biggest names in the US stock exchange have bad days.

2. Make sure to look for a reliable US stock trading platform that operates in the UK. You can find more details on what platforms to consider below..

3. When doing so, make sure to compare exchange rates, service usability, and monthly fees. It’s also worth looking closely into how each service makes its money, as they will all need to make an income somehow!

4. Then, complete your W-8BEN form. This will allow you to start trading in US stocks, and will ensure that you can benefit from lower US tax on listed companies you wish to trade with. Certain platforms, such as Stake for example, completely automate this process for you.

5. Once you’re settled into your US share trading platform of choice, make sure you understand any and all fees that apply. Then once you are happy that all is in order you can start trading in US stocks.

Choose the Best Stock Trading Platform For You

The best option to buy US stocks in the UK may depend on your personal circumstances and preferences. But it’s worth considering a brokerage platform which not only has a wide selection of US stocks. But also ensures you pay the lowest fees and commission rates possible.

Consider How You Are Likely to Invest

If you are likely to be trading regularly then you definitely want to consider a platform which offers commission free and unlimited trading. The speed with which you can trade is also worth considering. So a platform which allows you to hold funds in USD is likely to be of benefit.

Alternatively if you plan to build a fairly small portfolio and hold those stocks over a long period of time. Or you also want to have a portfolio of both US and UK stocks. Then choose a platform that best supports those requirements. There is really no one size fits all when it comes to stock brokerage platforms.

Cheapest way to buy US Stocks in the UK

The absolute cheapest option for buying US stocks in the UK will vary from person to person due to the way that different platforms structure their fees. For example with Freetrade you will pay a small FX fee of 0.45% on every trade (buying and selling). However if you use Stake you only pay an FX fee of 0.50% on deposits and withdrawals, but no fees at all on trades. So if you are investing a reasonable initial sum, doing some level of active buying and or selling and wont be withdrawing regularly, then the Stake fee structure may well be the cheapest way for you to buy US shares in the UK.

Best UK Brokers for US Stocks

You can’t start building your US stock portfolio without opening an account with a suitable digital brokerage platform. Therefore, I’ve gone to the effort of looking at a few of the best UK platforms who offer the purchase of shares in US companies.

Stake

Stake is a leading platform for UK investors looking to start trading US stocks quickly and easily. What sets Stake apart from much of the competition is the sheer number of companies available to you. Choose from over 6,000 different stocks and ETFs. 

Another factor that puts Stake ahead of the competition is that you have completely unlimited commission free trading at your fingertips. While other brokers such as Freetrade offer no brokerage fees on US trades, they do still take a 0.45% FX fee on every trade. With Stake however, there are no brokerage and no FX fees at all on trades. The only FX fee is 0.5% when you deposit or withdraw. Once your account is funded you are free to trade as much as you like with no fees whatsoever. The option to leave USD funds in your account and not have to transfer to GBP also gives you the ability to trade quickly.

Fractional shares is another big plus point – so even if you can’t afford to buy a full Amazon share you can still own a piece of the action.

You’ll also get a free stock just for signing up: Use the link below and fund your account within 24 hours to receive a free stock in Nike, GoPro or Dropbox. You can also check out our full Stake review for more details.

Best For: Largest Selection of US stocks in the UK. Completely Unlimited Commission-Free Trading. Straightforward App Interface. Fractional Shares.

When you invest, your capital is at risk

Trading 212

Trading 212 is also a very popular name in the international markets. It’s very easy to get started with, offers lots of scope for new US stock investors, and what’s more, you’ll never pay a penny on stock trades as far as commission is concerned. Similar to Stake, Trading 212 also have a good number of stocks available as fractional shares. Along with an easy to use app there is also a web based platform available if that’s important to you.

As an added bonus, like Stake, you can also get a free stock when you sign up and fund your account.

Best For: App and Web Platform. US, UK and European Stocks Available.

Freetrade

Freetrade is another service I’ve looked at in-depth, and it should be very appealing to US stock newbies. As you can imagine, Freetrade also offers a lot of flexibility in terms of fees, with commissions never coming into the question on stocks and ETFs.

However you will pay a small 0.45% FX fee on all US stock trades (buying or selling). For that reason Freetrade may be better suited to those looking to invest and hold a smaller number of stocks. There is a smaller selection of US stocks currently available compared to the likes of Stake, although their selection is growing. 

Again, you can also get a free stock with Freetrade by signing up via the link below.

Best For: Beginner Traders. UK & US Stocks Available.

eToro

eToro tends to be one of the more famous names amongst the US trading pack, and again, it goes commission-free, likely to appeal to any traders just getting started. Although there are those pesky FX fees to consider. It offers a good selection of US stocks, though many people will likely use the service most of all to trade socially, and to trade in cryptocurrency. There’s the potential to diversify your portfolio a lot here. It’s worth mentioning however that eToro is a *CFD provider – so you never actually own the underlying asset – unlike Stake and Freetrade, where you do own the asset.

Best For: Social Trading. Broad Investment Diversity.

*68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

Interactive Investor

Interactive Investor is a well-established trading platform that promises tens of thousands of stocks and shares across the world. Unlike some other platforms listed here, however, there are regular fees you’ll need to be aware of. However, for sheer choice and flexibility, ii tends to be a good starting point for many US stock investors.

Best For: Singular Platform / Portfolio Access. Global Approach

Hargreaves Lansdown

Hargreaves Lansdown is a very popular trading service which, again, offers you plenty in the way of global opportunities. The service seems to offer competitive exchange rates on the whole, and it is very easy to narrow down your choices through the simple search function. On the whole, Hargreaves Lansdown is likely to appeal to investors who want to invest in markets all over the world.

Best For: Global Market Range. Charge and Service Clarity

Let’s Get Trading

Trading US stocks in the UK is no longer an impossibility or an imposition. You can easily scan through thousands of US stocks from the comfort of your mobile phone while building your current UK and European portfolios, too.

Buying US shares from the UK is made easy thanks to flexible apps and platforms which offer low fees and clear instructions. The platforms I’ve listed here will do more than enough to help you get started.