- Can you buy US stocks in the UK?
- Where to buy US stocks in the UK
- Fees for investing in the US stock market
- What to know before you invest in US stocks
- The major stock exchanges
- US stock prices
- Release times for company results
- Time zone differences
- Extended trading hours
- Foreign exchange risks
- You need to complete a W-8BEN tax form
- How to buy US stocks in the UK
- Stock picking in the US
- Buying US shares via funds, ETFs, or investment trusts
- CFD trading and spread betting
- Should you invest US stocks in the UK?
Buying US shares from the UK might seem a little daunting, particularly if you’re a relative newcomer to the stock market. But it really isn’t all that much harder than buying British shares.
There are a few things to watch out for, including taxes, currency movements, and additional dealing costs.
Here’s what we think you should know.
Can you buy US stocks in the UK?
Yes, you can buy US stocks in the UK. Most brokers allow you to buy and sell shares on the US market in the same account that you would normally use to buy UK shares.
Where to buy US stocks in the UK
Investing with a Stocks and Shares ISA is often a better move than using a standard share dealing account. Why? Because it can save you from paying income tax on your dividends and capital gains tax on any profits.
And the same principle applies if you’re buying US stocks in the UK.
If you hold US shares outside of an ISA, then you may have to complete additional self-assessment forms regarding foreign income.
In terms of selecting a broker, our list of top-rated brokers in the UK is a good reference for brokers with low fees and great customer service.
Fees for investing in the US stock market
Much like buying UK stocks, investing in international shares isn’t free. Beyond the standard commission fee for executing trades, brokers often charge a foreign exchange fee.
Your broker will handle all the currency conversion for you when you buy US shares, normally for a small fee. You will see this listed in their charges section.
Some brokers also offer foreign currency accounts where you can buy and sell in US dollars, or other major currencies, should you prefer to do so.
The dealing costs for buying and selling foreign shares can be slightly higher than for UK shares, but it varies from broker to broker. Many charge the same as they do for UK shares.
However, if you think you’ll be buying US shares from the UK on a regular basis, any difference in the basic cost is obviously a key thing to look out for.
Good for active investors who want lots of control and choice
IG Share Dealing Account *
| Trading Commission | £8.00‡ |
| Account Management Fee | £8.00† |
- Pros & Cons
- Fees & Charges
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- Good value for active investors
Cons
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Platform Fees:†
Monthly subscription fee: £0.00
Equities custody charge: £8.00/month, or £0.00 if you trade more than 3 times per quarter
Fund management charge: N/A
Dealing Fees:‡
UK shares & ETFs: £8.00 if you place 0-2 trades in the previous month, £3.00 if you place 3 or more
US shares & ETFs: £10.00 if you place 0-2 trades in the previous month, £0.00 if you place 3 or more
EU shares & ETFs: 0.1% trade value (€10.00 minimum)
Fund trades: See the Exchange Traded Funds (ETFs) commission rates above. (Units trusts and OEICs are not supported)
Spot + FX fees: 0.5%
Telephone dealing charge: £40.00 for UK shares, £50.00 for US shares
What to know before you invest in US stocks
US shares tend to be popular among UK investors, as the US markets are the world’s largest and they contain many of the biggest companies in technology, healthcare, and other sought-after industries.
In addition, many large companies based in Europe and Asia also list their shares on the US markets. This can be a convenient way for UK investors to buy them as well.
Let’s break down a few things you should know before you invest in US stocks.
The major stock exchanges
The main US stock markets to be aware of are the New York Stock Exchange (NYSE) and the Nasdaq. The latter is home to many of the newer companies in the technology sector.
In terms of indexes, which show you how the US market is performing, the Dow Jones Industrial Average, the S&P 500, and Nasdaq 100 are the main ones investors follow. The Dow Jones and S&P 500 cover companies on both the NYSE and the Nasdaq. You can probably guess which exchange the Nasdaq 100 covers!
US stock prices
Another quirk to be aware of is that US stock prices tend to be higher than in the UK.
The prices of US companies are often several hundred dollars for a single share, or even a few thousand. In the UK, most shares are priced between £1 and £20.
A higher share price does not necessarily mean a company is more expensive, but it can make it more awkward to invest smaller sums in US shares.
Thankfully, many brokers now allow you to buy so-called fractional shares, meaning it’s much easier buying US shares from the UK whatever the size of your portfolio.
Release times for company results
Another thing to be aware of when buying US stocks in the UK is that most companies release their results shortly after the US market officially closes for the day. That’s in contrast to the UK, where most result announcements are made at 7 am each morning.
US companies also release quarterly results whereas the usual practice in the UK is to release results twice a year.
Time zone differences
The main US markets are open from 9:30 am ET to 4 pm ET. That’s 2:30 pm to 9 pm UK time (although the US often changes its clocks on different weekends to the UK so, at times, that can shift things back or forward by an hour).
You can either wait until the US markets are open before putting in a buy or sell order, or some brokers will let you place an order outside of US market hours and then execute it as soon as the market opens.
If you’re taking this latter route, you might want to specify a maximum buy price you want to pay or a minimum sell price you’re prepared to accept. You should be able to cancel your order if you change your mind before the US market opens.
Extended trading hours
With some brokers, it is possible to buy US stocks in the UK outside of normal US trading hours.
Extended hours trading in the US takes place from 4 am ET to 8 pm ET. Before the market opens is called “pre-market trading” and after is referred to as “after hours trading”.
Trading volumes during extended hours tend to be a lot lower than they are during normal trading hours, so shares prices can be extremely volatile. This is particularly the case after a company releases its quarterly results or other important information.
Foreign exchange risks
If you hold assets quoted in US dollars or another currency, then you’re exposed to foreign exchange risk.
This means that if the US dollar falls against the pound, then the value of your US shares also falls. But this works both ways: if the pound weakens against that the US dollar then your US shares will be worth more.
You need to complete a W-8BEN tax form
If you are buying US shares from the UK, then your broker will probably ask you to complete a US tax form known as an W-8BEN. Some brokers won’t let you deal in US shares unless you submit you do. Many now allow the completion of this form online, which tends to be a lot easier than printing it off, filling it out by hand, and then sending it back to your broker.
A W-8BEN is a one-page form on which you have to list some basic personal details. With the form completed, only 15% tax will be deducted from dividends paid out on US stocks, rather than the standard rate of 30%.
W-8BENs remain valid until 31 December following the third anniversary of you signing the form. For example, a form signed in April 2022 should remain valid until 31 December 2025.
Most brokers will contact you when you need to provide an updated version and you also need to provide an updated form should you change your name or address.
How to buy US stocks in the UK
The basic buying and selling process for US stocks is very similar to UK share dealing, with stocks usually identified by their ticker codes, such as AAPL for Apple and MSFT for Microsoft.
You may find that a broker doesn’t cover every single share that is listed on the US markets, as they tend to concentrate on those that are most popular with investors. Some brokers will add additional US stocks to their service on request, so it’s usually worth contacting them if you can’t find a particular company that you want to buy.
Stock picking in the US
The process of deciding which US shares to buy is much the same as selecting UK shares. Ideally, you will want a diversified mix of companies covering different industries and maybe market capitalisations.
The investor relations section of a company’s website often provides plenty of information on how a company has performed and how it is planning to grow.
Most US companies host quarterly conference calls to discuss their results and provide detailed answers on how their business works.
In addition, a number of Fool UK’s investing services recommend US stocks as well as UK shares.
Buying US shares via funds, ETFs, or investment trusts
Another way of buying US shares from the UK is to do so via a fund. In fact, this can be a cost-effective way to get exposure to a wide range of companies, especially if you are investing a smaller sum.
Buying a fund means you can avoid having to deal with foreign currencies and taxes but obviously you won’t have direct control over exactly which US shares are bought and sold and when. There will also be a fee charged by the fund manager for their services.
And you will also still have the same currency risk due to movements in the exchange rate between the pound and the US dollar.
Some funds invest just in US shares, or even just in certain sectors of the US market.
Others invest on a global basis, but as the US markets make up over half of the world’s total market value, they will usually have a significant proportion invested in the US.
CFD trading and spread betting
It’s possible to both CFD trade and spread bet US shares, just as you can do with UK shares.
CFD trading and spread bets are typically used to bet on price movements over shorter periods. In essence, you are speculating on price movements and you do not own the underlying asset, as is the case when you buy or sell shares.
Be aware that these forms of trading, allowing you to bet on share prices moving both up and down and trading on margin (effectively taking a larger position but only paying a small deposit) is inherently much more risky than buying US shares directly.
Should you invest US stocks in the UK?
As the US market is much larger than the UK, it has a much wider range of companies to choose from and has many businesses, particularly in technology, where there is no real UK equivalent.
So adding US shares to a UK portfolio can be a good way of filling in the gaps, so to speak, giving you a more rounded collection of stocks.