Yahoo Finance Best trading platforms in 2023
DIY investing has seen a boom in the last decade with direct platforms – where investors can place their own share trades rather than using a financial advisor or broker – accounting for over 75% of assets invested in the UK, according to investment research firm Platforum.
The popularity of ‘armchair trading’ during lockdown has also fuelled a rise in app-based trading, with analytics provider App Radar reporting a 40% increase in the download of investment apps in 2021.
And while the large DIY trading platforms, including Hargreaves Lansdown, AJ Bell and interactive investor, continue to dominate the market, zero-commission trading platforms have also made their mark in the last few years. These include the likes of eToro, Trading 212 and Freetrade which have tapped into the UK’s growing popularity of share trading.
With so much choice on offer, we’ve taken a look at what we consider to be the best trading platforms considering factors such as fees, choice of investments, customer support and extra trading features.
Please note that your capital is at risk. Investments can go up and down in value, so you could lose some, or all, of your money.
What are the best trading platforms?
We researched a number of trading platforms,and have set out our findings below. Our methodology explains the criteria used to rank the platforms, together with details of the research we carried out.
Hargreaves Lansdown Fund and Share Account - 5/5 stars
Trading fee (shares): £11.95 (0-9), £8.95 (10-19), £5.95 (20+) (based on previous month’s trades).
Trading fee (funds): No charge
Platform fee (shares): No charge
Platform fee (funds): Tiered, 0.45% (0-£250,000), 0.25% (£250,000-£1 million), 0.10% (£1 million-£2 million), Free (£2+ million)
Choice of investments: Over 3,000 funds, 8,500 UK, US, Canadian and European shares, 1,400 ETFs and 400 investment trusts
Pros
Wide range of investments
Can trade by phone, app or online
Extensive telephone support
Cons
High trading fees
High platform fees for funds
Foreign exchange fee of 1.0% (up to £5,000)
Why we picked it:
Hargreaves Lansdown (HL) is one of the largest trading platforms with 1.7 million clients. It offers a strong all-round service, with extensive research and a wide choice of investments. One of HL’s strengths is customer service, with an extensive call centre offering and the ability to trade online, by app or over the phone.
However, HL has one of the highest share trading fees and charges the highest platform fee of 0.45% (for portfolios under £250,000) for funds. That said, HL does not charge a platform fee for holding shares nor a trading fee for funds.
Overall, HL is a good option for investors willing to pay the extra cost for a premium service.
Indicative annual fees:
Portfolio of £25,000: £343
Portfolio of £50,000: £399
Portfolio of £100,000: £511
Trading 212 Invest Account - 5/5 stars
Trading fee (shares and funds): No charge
Platform fee (shares and funds): No charge
Choice of investments: Over 10,000 shares, investment trusts and ETFs across the UK, US and Europe
Pros
No trading or platform fees
Wide range of investments
Lowest foreign exchange fee of 0.15%
Cons
Minimal research available
No funds (OEICs) offered
No telephone support
Why we picked it:
Trading 212, a profit-making UK start-up, offers commission-free trading, with 1.5 million clients. It offers a wide choice of investments, as well as the lowest foreign exchange fee of 0.15% amongst the selected platforms.
Although Trading 212 does not offer a telephone service, it achieved excellent response times for its messaging facility, and provided comprehensive information in answer to our questions.
Overall, Trading 212 combines low fees with an excellent choice of investments, and is the cheapest platform for overseas share trading.
Indicative annual fees:
Portfolio of £25,000: no fee
Portfolio of £50,000: no fee
Portfolio of £100,000: no fee
interactive investor Trading Account - 4.5/5 stars
Trading fee (shares and funds): £5.99 (one free trade per month) for UK and US shares and funds, £19.99 for other international shares
Platform fee (shares and funds): £120 (flat charge of £9.99 per month which also includes a Stocks & Shares ISA and Junior ISA)
Choice of investments: Over 40,000 investment options, including over 3,000 funds, 600 investment trusts and 1,000 ETFs. Shares from 17 international markets, including the US, Canada, Europe and Australia
Pros
Flat platform fee
Wide choice of investments
Comprehensive research available
Cons
Charges trading fee for funds
Highest foreign exchange fee (1.5% up to £25,000)
Why we picked it:
interactive investor (ii) is one of the larger platforms with over 400,000 clients. Having recently been bought by investment firm abrdn, it has pledged to continue offering one of the largest whole-of-market investment ranges.
Unlike some of the platforms, interactive investor does not offer reduced trading fees to frequent traders in its standard investor account, although customers are given one free trade a month. If you are a regular trader in non-US overseas shares, you’ll pay a £19.99 trading fee in addition to the highest foreign exchange fee of 1.5%.
Investors with higher value portfolios may benefit from interactive investor’s fixed, rather than proportional, platform fee. However, investors with a portfolio worth £5,000 would still pay a lower platform fee than with a provider charging a platform fee of 0.25%.
Although interactive investor doesn’t provide a live chat facility, it answered our call promptly and provided detailed answers to our questions.
In summary, interactive investor is a good choice for occasional traders wanting a low-cost platform and an extensive range of investments.
Indicative annual fees:
Portfolio of £25,000: £192
Portfolio of £50,000: £192
Portfolio of £100,000: £192
IG Online Trading Platform - 4.5/5 stars
Trading fee (shares): Based on quarterly trades: UK shares – £8 (0-2), £3 (3+), US shares – £10 (0-2), no charge (3+), European shares – 0.1% (minimum charge of €10). Funds: Not offered
Platform fee (shares): £24 per quarter/£96 per year (if no trades in the quarter), no charge if 3+ trades in the quarter
Trading and platform fee (funds): Not offered
Choice of investments: Offers 13,200 UK, US, European and Australian shares and investment trusts, as well as 1,000 ETFs and 500 closed-end funds
Pros
Flat platform fee (free for frequent traders)
Wide choice of investments
Low foreign exchange fee of 0.5%
Cons
High trading and platform fee for occasional traders
No funds (OEICs) available
Why we picked it:
IG is a FTSE 250 company with over 300,000 clients. It offers one of the widest choice of investments, in addition to advanced technical trading tools for the experienced trader.
IG offers one of the lowest trading fees of £3 for UK shares for frequent traders, although less regular traders will be charged a higher trading fee of £8. It charges one of the lowest foreign exchange fees of 0.5% and investors can hold foreign currencies in their account, which can help to reduce foreign exchange fees further.
Investors with higher value portfolios may be attracted by its fixed platform fee, while frequent (more than 12 trades per year) do not pay a platform fee. However, the platform fee may be expensive for people who trade occasionally, and investors with lower-value portfolios.
IG offers 24 hour a day support during the week and our call was answered almost immediately.
Overall, IG is likely to appeal to more experienced traders looking for a wide range of complex investments and advanced trading tools.
Indicative annual fees:
Portfolio of £25,000: £192
Portfolio of £50,000: £192
Portfolio of £100,000: £192
AJ Bell Youinvest Dealing Account - 4.5/5 stars
Trading fee (shares): £9.95 (0-9), £4.95 (10 or more deals in previous month).
Trading fee (funds): £1.50
Platform fee (shares): 0.25% (capped at £42 per year)
Platform fee (funds): Tiered, 0.25% (0-£250,000), 0.10% (£250,000-£500,000), no charge (£500,000+)
Choice of investments: Over 2,700 funds, 420 investment trusts and 2900 ETFs, in addition to 8,200 shares across 24 international markets including the US, Canada, Japan and Europe
Pros
One of lower platform fees
Extensive research
Choice of trading online, by app or by phone
Cons
One of highest trading fees (£9.95)
Charges trading fee for funds
Foreign exchange fee of 1.00% (on first £10,000)
Why we picked it:
AJ Bell is a FTSE 250 company with over 400,000 clients. It offers one of the lower platform fees for funds among the larger platforms, along with extensive research.
However, AJ Bell charges one of the highest share trading fees of £9.95, unless you trade more than ten shares a month. It is also one of the few platforms to charge a trading fee on funds.
While its platform fee of 0.25% is one of the cheaper amongst the larger platforms, this fee is charged on shares in addition to funds.
AJ Bell provides telephone support six days a week, in addition to a live chat facility. Our calls were answered within a minute and it also excelled on the quality of responses to our questions.
Overall, AJ Bell is a more attractive platform for investors looking to buy funds rather than shares, due to the platform charge and high trading fee on shares.
Indicative annual fees:
Portfolio of £25,000: £301
Portfolio of £50,000: £343
Portfolio of £100,000: £406
What’s our methodology?
We applied two main criteria in selecting our list of best trading platforms:
In addition to its own funds, does the trading platform offer a choice of investments from third party fund managers?
Does the trading platform have a rating of 4.0 or higher on Trustpilot? If the platform had no reviews on Trustpilot, we looked at its ratings on other consumer review sites.
We compared a wide range of features across the trading platforms, with the biggest weighting given to fees and the choice of investments on offer.
We also considered other criteria, including the quality of research and customer support, the option of app-based trading, trading features (such as monthly investing and stop loss and limit orders), foreign currency fees and the option to buy fractional shares.
In addition, we confirmed whether the trading platforms were authorised by the Financial Conduct Authority (FCA) and reviewed customer complaints data from the FCA.
We carried out our research by telephoning the customer services department (or where this wasn’t available, by live chat or email) with the same questions about the features of each trading account. Calls were carried out between 9-10 am on the same day to enable a fair comparison of the time taken for responses.
We combined this research with editorial judgement to determine our star ratings.
What assumptions were used for our fee calculations?
We calculated the annual platform fees using the following assumptions:
Trading frequency: buying or selling two shares each month, with a total of 24 trades in a year
Type of shares: trading fees are based only on shares as some platforms do not offer funds.
Foreign currency fees: for accounts not able to be held in pounds, we calculated the foreign currency exchange fee on the total value of the portfolio
Platform fees: we assumed an equal split between funds and shares, as platform fees can vary significantly between these investment types. If platforms did not offer funds, we calculated the platform fee based on the whole portfolio being held in shares
Portfolio value: we calculated the fees for portfolios of £25,000, £50,000 and £100,000
Frequently Asked Questions (FAQs)
What type of trading account should I choose?
We’ve looked at general investment accounts offered by trading platforms. These allow you to buy and sell shares and other investments directly, rather than via a financial adviser.
However, there are a variety of tax-efficient alternatives, including an Individual Savings Account (ISA), Self-Invested Personal Pension (SIPP) and Junior Stocks and Shares ISA (JISA).
These ‘tax wrappers’ allow you to pay no income tax on dividends and capital gains tax on any profit made on shares. However, access to investments held in SIPPs and JISAs is limited until you reach a certain age. Some of the trading platforms listed also offer ISA and SIPP accounts in addition to general investment accounts.
What fees are charged by trading platforms?
There are three main types of fees charged by trading platforms:
1. Share trading fee
Some platforms charge a flat fee every time you buy or sell shares, typically between £6 to £12 per trade, although a few platforms charge no share trading fee. On the whole, platforms do not charge a fee for buying and selling funds, although a small number charge a fee of £1 to £8.
Platforms generally offer a reduced share trading fee for monthly investing, for example, if you buy £20 worth of shares every month. This helps to avoid the potential issue where the share trading fee ‘eats into’ a disproportionate amount of your investment.
2. Platform fee
Platform fees are an annual fee for holding shares and funds in your account. The majority of platforms charge a percentage of the value of your investments held, typically 0.25% to 0.45%. However, not all platforms charge a platform fee and some charge a flat fee.
It’s more common for platform fees to be charged only on the value of funds rather than shares. Where a platform fee is charged for shares, it’s often capped at a maximum amount per year.
There are two different types of percentage-based platform fees:
Tiered fee: most platform fees are tiered, meaning that you pay different fee percentages on different ‘slices’ of your portfolio. For example, if you have a portfolio worth £350,000, you might pay 0.45% on the first £250,000, then 0.25% on the next £100,000.
Non-tiered fee: Fidelity is the only platform on our list to charge a non-tiered fee, meaning that you pay the same fee across your portfolio as a whole. For example, if you have a portfolio of £350,000, you would pay 0.2% on the whole £350,000.
3. Foreign exchange fee
If you trade shares in a currency other than pounds sterling, the majority of the platforms charge a foreign exchange fee. This is also known as a foreign currency conversion fee and generally varies from 0.5% to 1.5%. Some platforms may also charge a higher trading fee for non-UK shares.
A few platforms allow you to hold your account in a foreign currency, allowing you to pay one foreign currency fee to convert a larger sum to use for future share trading.
4. Other fees
Some platforms charge other types of fees, including inactivity fees and withdrawal fees (for accounts held in a foreign currency) and telephone trading fees.
Although not technically a fee, platforms also make a profit on the buy-sell spread on shares. Some platforms may offer more competitive buy-sell spreads than others, and less regularly-traded shares, such as smaller cap companies, usually have a wider spread than FTSE 100 companies.
What tax will I pay on buying and selling shares?
Stamp Duty Reserve Tax (SDRT) of 0.5% is charged on share purchases, although it is not usually charged on overseas shares..
If you sell the shares for a higher price than the purchase price, you will also be liable to pay capital gains tax (CGT) on this profit. However, you do not have to pay CGT if your gains (or profits) are less than the current allowance of £12,300 (2022/2023).
You may also have to pay income tax on any dividends or income paid by your investments. In addition to your personal allowance of £12,570, there is an additional dividend allowance of £2,000 (in the current tax year).
As mentioned above, investors do not have to pay income or capital gains tax on shares held in ISAs, SIPPs or JISAs.
What is a ‘limit order’ and ‘stop loss’?
Limit orders and stop losses are useful tools for share traders. Investors can set a limit order to buy or sell shares, at, or better than, a set price. Limit orders help investors to pay or receive a good price for their shares without needing to spend the time monitoring live share prices.
For example, if you set a buy limit order of 100 pence, the trade would only be executed at a price of 100 pence, or lower. Sell limit orders are only executed at the specified price, or higher.
Using a stop loss can help investors to limit their potential downside from buying shares. If an investor bought shares in a company at 100 pence, setting a stop loss at 90 pence would mean that, if the price falls to 90 pence or below, the shares would automatically be sold. As a result, the investor would have limited their loss to 10%.
What regulatory protection is available?
You should check the FCA register to confirm that your platform is authorised by the FCA. This provides you with access to the Financial Ombudsman Service and the Financial Services Compensation Scheme (FSCS) if a problem arises.
The Financial Ombudsman Service considers complaints against trading platforms and, if the firm fails to resolve your issue adequately, it may be able to resolve your complaint.
The FSCS will consider claims where an investor is owed money by a trading platform which has gone out of business. The FSCS can pay up to £85,000 per investor for eligible investments.
Some trading platforms also hold their investments ‘in trust’ to provide investor protection if the firm encounters financial difficulties.
What should I consider before trading in shares?
Investing in shares may provide superior returns than cash-based investments, particularly for investors seeking above-inflation returns. However, the value of your investment can fall, as well as rise, and you may not get your money back.
Investors may want to consider diversifying their portfolio beyond shares in individual companies. Funds, investment trusts and exchange-traded funds provide a ready-made portfolio of shares which reduce the risk of an individual company underperforming.
However, if you are unsure as to the right investment for your circumstances, you should seek independent financial advice.
