Sammie Ellard-King
I’m Sammie, a money expert and business owner passionate about helping you take control of your wallet. My mission with Up the Gains is to create a safe space to help improve your finances, cut your costs and make you feel good while doing it.
Whether you’re an experienced investor or just starting out in the stock market, buying US stocks can be confusing. Thankfully, it’s easier than you might think!
All you need to be aware of is the differences between stocks in the UK compared to stocks in the US.
This guide will teach you how to buy US stocks in the uk and everything you need to know about the transactions and taxes associated with them.
Table of Contents
Can I Buy US Stocks From The UK?
Non-US citizens are entitled to buy US stocks, yes, you can! While the US stock market is governed by American law, you are still legally able to buy US stocks.
This also applies to other investments in the US, such as government bonds, corporate bonds, and US property.Â
The US stock market is undoubtedly the largest in the world and offers some of the most popular stocks in the world to trade, such as the infamous FAANGs like Facebook, Apple, Netflix and Google alongside 10s of thousands more.
As a British citizen, you can benefit greatly from US stocks. It can give you global market exposure for your investment portfolio and diversify your assets.Â
You also don’t need to open a US brokerage account to buy US stocks from the UK. British banks and brokers offer accounts that citizens can use to buy from the US stock market.Â
There are also different platforms you can use for trading.
For example, LCG offers trading opportunities in thousands of US stocks listed on the New York Stock Exchange, NASDAQ, and BATS, taking just 2 to 4 cents per share as commission.Â
How Do I Buy US Stocks In The UK?
Before you start trading in US stocks, you should compare options when choosing the best brokerage accounts.
Some brokers offer a full list of US stocks available, while others only have the most popular stocks, so consider this before making a decision.
Here are the simplified steps for getting starting in buying US stocks:
- Compare different brokers and decide which one best suits your investment habits. You can use an online investment fees calculator to help you understand the charges and risks you might face.
- After choosing a broker, open a stocks and shares brokerage account. You might want to consider tax efficiencies when doing so, and think about whether a GIA, ISA or SIP might help.
- Next, fill out your W-8BEN form. This form will confirm that you aren’t a US tax resident, which can reduce the amount of dividend tax you pay.
- Choose and buy the US stocks you’d like to invest in. Make sure you look out for any applicable fees before you trade. For example, there may be a fee to convert your British pounds to US dollars.
What is a W8-BEN form?
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Do I have to buy US stocks in US currency?
US stocks are bought and sold in American currency, however, this isn’t a problem.
When buying US stocks, your broker will take the British pounds from your account and convert them into US dollars, which they will then use to buy the share.
Then, if you decide to sell the share, the money will be converted back into your national currency before it’s placed back into your trading account.
It’s important to be aware of the exchange rate when using British currency to buy US stocks, as you could be exposed to currency fluctuations.
If sold at the wrong time, you could make a loss on your stock due to changes in the exchange rate.
Do I have to pay tax on US stocks?
When trading in US stocks, you should be aware of the different taxes that might apply to you.
You can consult a financial advisor if you’re struggling with the different tax bills that come with the US stock market. The following taxes are relevant to you as a UK investor with US stocks.
Dividend Tax
Dividend tax refers to what you pay on any income you might earn from your US investments.
This is where the W-8BEN form comes in – your dividend tax will be reduced on most stocks when you declare that you aren’t a US tax resident.
Dividend Tax In ISAs
ISAs protect your UK investments from tax charges, however, they don’t help in the same way on your US investments. If you receive US dividends in your ISA, you will have to pay 15% tax.
Capital Gains Tax
Filling out the W-8BEN form means you won’t pay US capital gain tax, however, you might owe HM Revenue and Customs if your US stocks aren’t inside a tax-efficient wrapper, like an ISA.
What Are The US Stock Market’s Trading Hours?
Both the NYSE and NASDAQ stock markets operate on Eastern Standard Time, or EST.
These stock exchanges are open on weekdays from 9:30 am to 4:00 pm, which is equivalent to 2:30 pm to 9 pm if you’re an investor trading US stocks from the UK.Â
Both of the mentioned exchanges have pre-market and post-market trading as well, however, there are additional risks to your investments during these extended hours, due to fewer investors trading at this time.
It means price fluctuations are more frequent, especially in reaction to news headlines about a stock.
FAQs
Can you invest in US funds in the UK?
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What is the best way to buy US shares?
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Do you buy US stocks in pounds or dollars?
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Conclusion
There is great potential for investment in the US stock market, with many high-value stocks available to buy.
These opportunities aren’t just for US investors, and you, as a UK citizen, are fully entitled to participate in this huge market.
With the right knowledge and investment experience, you’ll be able to make waves in the US stock market in no time at all.
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Disclaimer: Content on this page is for informational purposes and does not constitute financial advice. Always do your own research before making a financially related decision.
