Buying US Shares From the UK: Step By Step Guide


Many large-cap firms, such as Apple, Google, and Amazon, are on the US stock exchange. That’s not quite surprising, owing to the fact that the US is home to many mega-companies. With that, we’ll look over to Buying shares in US Companies from UK and US stocks In the UK

Buying Shares IN US Companies From UK

There are numerous reasons why you might consider investing in US stocks. For starters, you’ve probably heard of many of the companies mentioned in the United States.

Size isn’t everything, however, the United States is massive. America is home to the world’s two largest stock exchanges, which means that the country’s exchanges are home to a plethora of large, well-known corporations. You have plenty of options for investments.

However, just because a firm has a huge market capitalization does not make it a successful investment. When determining whether to acquire stock in a firm, no matter how large or little, there are a number of important factors to consider.

Everyone has a unique set of ambitions and financial conditions. These, together with your investing risk tolerance and time horizon, should influence the asset mix you select, as well as whether or not US or UK equities belong in your portfolio.

 Buying US Companies shares in the UK, Is it possible?

You don’t have to be an American to invest in American companies. To purchase US stocks, you do not need to open a US brokerage account.

They are available for purchase in the United Kingdom. On this side of the Atlantic, UK banks and brokers have accounts where you can buy US shares.

How to Buy US Stocks in the UK

However, not all brokers will offer a full range of US equities, and some may just offer the most popular stocks from an index such as the S&P 500. Alternatively, they may just carry ETFs that track a diverse range of American companies. As a result, the first step in buying US Companies’ shares in the UK is to compare brokerage accounts

This is a basic list of what you can expect if you invest in US shares from the UK.

  • Compare brokerage accounts to see which one best fits your investing habits and platform requirements. Our investment fees calculator can assist you in understanding the charges you may incur.
  • Open a stock brokerage account with your preferred broker. You may wish to consider tax efficiencies here. Consider whether a GIA, ISA, or SIPP could be beneficial.
  • Complete your W-8BEN form. You may accomplish this in-app with Freetrade. This is the correct tax form to use to confirm that you are not a US tax resident, which can minimize the amount of US dividend tax you pay.
  • Choose the US stocks you want to purchase.
  • Purchase US stock. Once you’ve decided on the US stocks you want to buy, keep an eye out for any fees that may apply. FX fees, for example, can occur when you pay to convert GBP to USD, so keep an eye on these while making investments.

Now we’ll go through those processes in further detail, as well as some of your possibilities for investing in US equities from the UK.

What types of US Stocks in UK can I be buying?

The United States has 13 stock exchanges, the most important of which are the National Association of Securities Dealers (NASDAQ) and the New York Stock Exchange (NYSE).

Do you buy stocks in the US in pounds or dollars?

US dollars are used to buy and sell US stocks. But don’t worry if you don’t have a US dollar account full of Benjamin Franklins.

If you bought a Tesla share from a UK trading account, your broker would withdraw the funds from your account and convert them to US dollars. Your broker would then use the US money to purchase the share.

If you opt to sell the share, the proceeds will be converted from the foreign currency to your home currency before being deposited back into your trading account.

How much does it cost In Buying US stocks in UK?

As a UK investor, you are vulnerable to swings in foreign exchange rates because your trading is conducted in US dollars.

Assume you buy a stock in a US business and the US dollar rises in value relative to the British pound. Even if the share price hasn’t changed, the US share is technically more valuable to you due to currency appreciation.

However, if the US dollar falls in value in relation to the British pound, that share will be worthless to you as a British investor.

What taxes do you have to pay when buying US stocks in the UK?

When investing in US stocks, there are a few different taxes to consider. To decide which applies to you, you must first assess if you are a ‘nonresident immigrant.’ For a non-US citizen, this is classic Americanism. The following taxes apply to non-US citizens who invest in the United Kingdom. Remember that tax is as personal as it gets, so seeks professional advice if you are unsure about the tax implications.

Dividend taxation

Dividend tax is the tax you pay on any income generated by your US investments. Freetrade deducts any dividend tax from US-sourced income in your General Investment Account (GIA) or Individual Savings Account (ISA).

If you are a non-US investor, you must complete the W-8BEN form. You may sign this form directly in-app with Freetrade.

The form certifies that you are not a US tax resident, lowering the amount of US dividend tax you pay on most shares from 30% to 15%. This tax can also be cut to 0% if you hold these shares in a SIPP.

Dividends in ISAs are taxed.

ISAs shield your UK investments from taxation. However, ISAs do not provide the same tax benefits for your international investments. As a result, if you receive US dividends in your ISA, you will be subject to a 15% tax. With Freetrade, all of this happens automatically, and you won’t have any forms to fill out or paperwork to file.

Capital gains taxation

If you’ve completed the W-8BEN form, you won’t have to pay US capital gains tax in the US, but you may owe it to Her Majesty’s revenue collection if your US shares aren’t in a tax-efficient wrapper.

If you held these US shares in your GIA, you must calculate your gain and determine whether it falls under your capital gains allowance (CGA) for the tax year. These capital gains taxes will not be withheld or calculated by your brokerage business.

However, if you hold your US investments in an ISA, you will not have to pay capital gains on those US shares. You would only be subject to the above-mentioned 15% dividend tax, if applicable.

Can you be buying IPO US stocks in the UK?

As an investor, you have several options for participating in a company’s initial public offering. The primary and secondary marketplaces are the most common.

Most brokerages allow you to purchase stock following the first public offering (IPO). Once the company is listed on the financial markets, you will use your share dealing account to purchase shares. We also keep track of upcoming IPOs so you can stay up to date and acquire shares when they go public if you’re interested in investing

As thrilling as it is to invest in a new company in the market, don’t get carried away by the flashiness of it all. When a business goes public, don’t forget to look under the hood before giving it some gas.

That is true of any investment you make, regardless of where it comes from. Even in the United States of America.

Five stages to buying US stocks in the UK

The steps to buying US shares from the UK are well explained in the following

#1. Create a trading account for stocks.

To buy US stock on our trading platform, you must have a share dealing account. In just a few minutes, you can open an IG share trading account on our website or app and begin buying shares.

You’ll be able to choose from over 12,000 shares, ETFs, and investment trusts once you’re set up, with no commission on US shares. It’s simple to manage your own account, and you have access to dedicated 24-hour help whenever you need it.

#2. Fill out a W-8BEN form.

Individuals cannot purchase US securities without a W-8BEN form, which is required by the American Internal Revenue Service (IRS). As a result, the second step in purchasing US stocks in the UK is to complete this form. You do not need to download anything; you can finish it on our online platform. The W-8BEN is used to confirm that you are not a US resident. It enables us to process an individual tax advantage on your behalf – a reduction of up to 30% in the amount of US tax you pay on dividends on US shares you purchase.

#3. Learn about the fees associated with buying US shares.

Fees and commissions for US shares vary depending on whether you purchase them online or over the phone. If you trade US stocks with IG more than three times in a calendar month, you will not be charged a commission. Otherwise, you will be charged the normal fee of £10. When you buy US stocks over the phone, we charge £50.

#4. Choose the US stocks you want to purchase.

There are hundreds of major US stocks to pick from, like Amazon, Facebook, Apple, and Google. After you’ve opened and financed your account, navigate to the ‘finder’ screen and input the name of the US shares you want to purchase.

#5. Purchase US stocks

The IG share trading service allows you to purchase US stocks. To begin, open an online share trading account and deposit funds. Next, log in and navigate to the share trading site, where you can enter the name of the firm whose shares you want to purchase in the ‘finder’ panel.

Finally, decide whether you want to purchase the shares at the current market price or make an order to purchase the shares at a specific price. A limit order, for example, specifies the price at which you are willing to pay and executes automatically when the price level is reached.

In Conclusion

With the above, buying shares in US companies from the UK is possible, and the above can serve as a guide.

Buying US Shares From the UK FAQ’s

Can I buy US stocks from the UK?

Yes, it is entirely possible to buy US stocks from the UK. Non-US citizens are entitled to buy US stocks. While the laws that govern US stock markets are American, you do not need to be an American to invest in them

Do you pay tax on US stocks in the UK?

The most important example is the US, where the default tax is 30%, but the rate for UK residents is 15%. The withholding tax on your dividends will be reduced to 15% if you complete form W-8BEN [PDF]. Most brokers will automatically get you to do this by opening an account that allows you to trade US stocks.

Do you have to pay tax on US shares?

Generally, any profit you make on the sale of a stock is taxable at either 0%, 15%, or 20% if you held the shares for more than a year or at your ordinary tax rate if you held the shares for less than a year. Also, any dividends you receive from stock are usually taxable.

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Generally, any profit you make on the sale of a stock is taxable at either 0%, 15%, or 20% if you held the shares for more than a year or at your ordinary tax rate if you held the shares for less than a year. Also, any dividends you receive from stock are usually taxable.

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