How to buy shares in the UK
Four steps, and the mechanics take minutes. The parts worth understanding are the account you use, the order type you place, and the five separate costs — two of which never appear on your contract note.
The four steps
1. Choose a broker
A regulated platform that executes trades and holds your shares. Compare the annual platform fee, the dealing charge per trade, foreign exchange fees if you'll buy overseas shares, and which markets are covered. Check the provider is authorised by the FCA and that your holdings are covered by the FSCS.
2. Choose the right account
A stocks and shares ISA shelters gains and dividends from UK tax and costs nothing extra at most providers — for most people this is the default. A general investment account has no allowance limit but is taxable. A SIPP is for pension money, with tax relief going in and no access until later life.
3. Fund it and place an order
Transfer money in, search for the company, enter how much you want to buy, and confirm. The whole process takes minutes.
4. Wait
Settlement usually completes within a couple of days, after which the shares are legally yours. Most platforms hold them in a nominee account, which is normal.
The order types worth understanding
A market order executes immediately at the best available price. Simple, and fine for large liquid companies. A limit order executes only at a price you specify or better — slower, but it protects you in thinly traded shares where the spread is wide.
Outside exchange hours you'll usually be offered an at-quote or delayed order that executes when the market next opens.
The costs, including the ones nobody mentions
Dealing charge
Per trade. On a £100 purchase a £10 fee is a 10% loss before you start, so either use a low-cost platform or trade less often in larger amounts.
Platform fee
Annual, either a percentage or a flat amount. Percentage fees suit small balances; flat fees suit large ones. On £1,000, a £10 monthly flat fee is 12% a year.
Stamp duty
0.5% on most UK share purchases, collected automatically. Not payable on most AIM shares or on overseas shares.
The spread
The gap between the buy and sell price. Invisible on your contract note but very real, and much wider on small companies.
Foreign exchange
Buying US shares converts your pounds, usually at a marked-up rate. Check the FX charge separately from the dealing fee.
Before your first purchase
Clear expensive debt first — paying off a card charging 20% is a guaranteed return no investment reliably matches. Hold three to six months of spending in cash, so an unexpected bill doesn't force you to sell at a bad moment. And be clear whether you're buying a business you've formed a view on or a name you've heard of. See is £1,000 enough to start and how to pick stocks.
Decide what to buy on a number
Oak Growth estimates what roughly 1,000 companies across eight markets are worth and shows the gap against today's price, with moat, management, economics and value scored for each.
Explore Oak GrowthCommon questions
How do I buy shares in the UK?
Open an account with an FCA-regulated broker, choose an account type — usually a stocks and shares ISA for its tax treatment — transfer money in, search for the company and place an order. Settlement completes within a couple of days, after which the shares are yours.
What is the cheapest way to buy shares in the UK?
Costs come from the dealing charge per trade, the annual platform fee, stamp duty of 0.5% on most UK purchases, the bid-offer spread and any currency conversion. Percentage-based platform fees generally suit smaller balances and flat fees suit larger ones, and fewer, larger trades reduce dealing costs.
Do I pay tax on shares in the UK?
Gains and dividends are taxable in a general investment account, subject to annual allowances. Inside a stocks and shares ISA they are not taxed at all and don't need declaring. Stamp duty of 0.5% applies to most UK share purchases regardless of account type.
What is the difference between a market order and a limit order?
A market order executes immediately at the best price available, which is fine for large, heavily traded companies. A limit order only executes at a price you set or better, which matters in smaller companies where the gap between buying and selling prices is wide.
Also see: Stocks and shares ISA explained → · Is £1,000 enough to start investing? → · How does the stock market work? →