How to buy, sell and invest in US stocks from the UK

Interested in trading US stocks? If you’re a new UK investor and aren’t yet experienced in the world of share dealing, you’ll need to know how to get started.

In this guide, we’ll walk you through the process of buying, selling and investing in US stocks from the UK. This includes how to open a trading account, what forms you need to fill in, and how you can calculate the cost.

So, let’s dive right in.

How to invest in US stocks from the UK

There are a few ways you can invest in US stocks as a UK investor. You can buy shares directly, or you can invest in a professionally-managed investment fund. These include exchange-traded funds (EFTs) and investment trusts.

Here, we’ll focus on how to buy and sell shares in US companies directly, via one of the many popular online investment platforms available in the UK.

Buying shares in a US company from the UK

It’s relatively easy to buy shares in the UK. You don’t need a broker (although you can use one if you want, for a fee), as you can do everything online.

All you need to do is create an account on your choice of online investment platform, and place orders for trades in just a few clicks.

However, there is a little tax-related paperwork to complete, and some crucial cost calculations to make sure you’re factoring in fees and currency conversion costs. We’ll cover all of that next.

How to buy US shares in the UK: Step-by-step

Let’s run through the steps involved in buying shares in a US company as a UK-based investor.

1. Open a share trading account

There are lots of investment platforms available in the UK, and most offer trading in US stocks.

Some options to check out include:

• eToro
• XTB
• Hargreaves Lansdown
• Trading 212
• Interactive Brokers
• Webull

Do some research to compare fees, features and customer reviews, and choose the right one for you. You can usually open a trading account in just a few simple steps, although there are usually additional identity verification processes to complete.

Remember, always check that the company is listed on the FCA register to ensure that they are a legitimate company.

2. Fill out a W-8BEN form

If you plan to buy US shares, you’ll usually need to complete a W-8BEN form.

This is a form from the Internal Revenue Service (IRS), the US equivalent to HMRC in the UK.

It is designed to prove that you are a tax resident of a country outside the US, and can allow you to get a lower tax rate on US-derived income (i.e. returns on investments) as a foreigner.

This is important, as the US normally levies a tax rate of 30% on foreigners earning US-sourced income. But it offers a reduced rate on residents of countries which have a tax treaty with the US, which is the case for the UK.¹

Fill in the W-8BEN form and your tax rate should be reduced to just 15%. This will be deducted from your investment earnings before they are paid to you.¹

Your investment platform should have an online version of the W-8BEN form for you to complete.²

However, you might need to complete, sign and send a paper version of the form in certain circumstances. For example, if you’re funding investments with a joint account, corporate or charity account, or if you’re acting as power of attorney for someone else.²

3. Calculate the cost

Your chosen trading platform will tell you how much your shares will cost, but you also need to factor in fees and currency conversion costs.

Platforms may charge annual fees, or per-transaction commission fees for trading.

It’s also worth remembering that you can only buy US shares in US dollars (USD). This means that your British pounds (GBP) will need to be converted to USD somewhere along the way, which may incur foreign currency fees.

To give you an idea of these costs, here are the fees charged by a handful of popular platforms:

Platform	US trade (commission) fees	Foreign exchange fees
eToro	£03	0.75%4
XTB	£05	0.5%5
Hargreaves Lansdown	£5.95 to £11.956	0.25% to 1%6
Trading 212	£07	0.15%7
Interactive Brokers	£1.798	0.03%8
Note: All above investment platform fees were correct as of 22nd November 2024.

As you can see, some of these foreign exchange fees are high enough that they can start eating into your return. To avoid these, it could be a good idea to use a Wise account.

With Wise, you can open a USD account and hold your money until you’re ready to buy (or sell). Then you can trade directly in USD on your chosen investment platform. When you need to convert money to GBP or into USD, you can take advantage of Wise’s low, transparent fees* and great exchange rates.

4. Decide which US shares to purchase

The last step is to decide which US shares to purchase, and then place the order. You might want to get some professional advice on which company to invest in, whether it’s a large corporation like Microsoft or Amazon, or if you want to pursue an alternative investment strategy.

Selling or trading shares in a US company from the UK

Now we come to the steps involved in selling US shares from the UK.

1. Open a share trading account

If you’ve bought shares, it’s likely that you already have a share trading account. But if you’ve acquired them through another means, such as through inheritance or an employee share scheme, you’ll need to open an account.

Check out one of the options we’ve listed above, making sure to compare prices, features and reviews before signing up. Remember to have some form of photo ID handy in case you’re asked to verify your identity.

2. Fill out a W-8BEN form

The W-8BEN form is needed whether you’re buying or selling shares in the US. But it’s particularly important if you’re selling, as it relates to tax rates for income derived from the US (including earnings from investments).

Complete the form online via your chosen investment platform, or fill out and send a paper form if you are using a joint or corporate account (or if you’re acting as power of attorney for someone else).

There may be other paperwork you need to complete, such as the NYSE subscriber agreement form. This is required in order to trade on the New York Stock Exchange (NYSE) with a corporate or trust account.⁹

3. Understand how much tax you need to pay

When you sell US shares, you’ll need to pay the IRS what is known as ‘withholding taxes’ on the income. If you complete the W-8BEN form, this rate will be 15% - and it’ll be automatically deducted from the earnings paid out to you.¹

For income earned outside of an ISA or other tax-efficient wrapper, you may also have to pay Capital Gains Tax (CGT) in the UK.

Tax can be complicated, especially when trading and earning income between two countries. It’s recommended to get professional tax advice to help you understand your obligations.

4. Calculate the cost

When selling US shares, there are a few costs to consider. These include commission or trading fees charged by the platform, along with currency conversion fees.

💡Remember- you can avoid some of these by opening a Wise account and holding your money in USD until you’re ready to sell/trade your shares.

Here are some of the fees charged by platforms offering international share dealing:

Platform	US trade (commission) fees	Foreign exchange fees
eToro	£03	0.75%4
XTB	£05	0.5%5
Hargreaves Lansdown	£5.95 to £11.956	0.25% to 1%6
Trading 212	£07	0.15%7
Interactive Brokers	£1.798	0.03%8
Note: All above investment platform fees were correct as of 22nd November 2024.

There are also a couple of US-specific fees to factor in, charged by the US government when selling shares:⁷

• FINRA fee - $0.000166 per share
• SEC fee - 0.00229%.

Opening hours of international stock markets

Stock exchange	Local trading times10	GMT trading times10
London Stock Exchange (LSE)	08:00-16:30	08:00-16:30
New York Stock Exchange (NYSE)	09:30-16:00	14:30-21:00
NASDAQ	09:30-16:00	14:30-21:00
Australian Securities Exchange (ASX)	10:00-16:00	00:00-06:00
Frankfurt Stock Exchange (FSX)	08:00-20:00	07:00-19:00
Tokyo Stock Exchange (TSE)	09:00-15:00	00:00-06:00

Don’t let currency conversion trip you up when trading - use Wise

In this article, we’ve looked at how to buy US stock in the UK. We’ve covered everything you need to know to get started, including info on currency conversion when trading shares in another currency.

If you trade in different currencies, you could be hit with extra costs for cross border money transfer.

The good news is that you can use Wise to avoid hidden currency exchange markups. Open a Wise account to convert currency at mid-market exchange rates, for low, transparent fees*.

Why not hold your money in a Wise account until you decide to invest it in your chosen platform. Set up exchange rate alerts with Wise to be notified via email or push notification when the rate drops to your chosen threshold.

You can also use your Wise account to conveniently manage your money in 40+ currencies, sending payments worldwide at the mid-market rate for low fees*. There’s even a dedicated secure service for sending large amounts.

There’s even an extra feature, Wise Interest. With a Wise account you can earn returns on GBP, USD and EUR by opening a Wise account and investing in a fund that holds government-guaranteed assets. Capital at risk.

Capital at risk. Growth not guaranteed. Wise Assets UK Ltd is authorised and regulated by the Financial Conduct Authority with registration number 839689. When facilitating access to Wise investment products, Wise Payments Ltd acts as an Introducer Appointed Representative of Wise Assets UK Ltd. Please be aware that we do not offer investment advice, and you may be liable for taxes on any earnings. If you’re uncertain, we urge you to seek professional advice. To find out more about the Funds, visit our website.

---

You may also be interested in the following articles:

• How Wise can help save on currency fees for your next USD RSU payout
• How to invest in the S&P 500 in the UK
• How to buy shares in Apple (AAPL)

---

Sources used:

1. The Motley Fool - W-8BEN
2. IG - W-8BEN form
3. eToro - eToro fees and charges
4. eToro - eToro conversion fees
5. XTB - XTB fees
6. Hargreaves Lansdown -Hargreaves Lansdown overseas share dealings and fees
7. Trading 212 - Trading 212 fees and trading terms for Invest accounts
8. Interactive Brokers - Interactive Brokers US stock trading costs for UK residents
9. IG - documents needed to start trading US stocks on the NYSE
10. CMC Markets - stock market trading hours

Sources last checked on date: 22-Nov-2024