What does it actually cost to invest in shares?
Four costs every UK investor needs to understand before they start. Dealing fees are just the beginning. Stamp duty, platform charges and the bid-ask spread all add up.
The cost to invest in shares is not just the dealing fee on a platform’s price list. UK investors also need to think about tax, spreads, platform charges and where the shares are held. Once those pieces are clear, platform comparisons become much more useful.
The Short Version
- The cost to invest in shares usually includes dealing fees, stamp duty, platform charges and the bid-offer spread.
- Stamp Duty Reserve Tax is normally 0.5% on electronic purchases of UK shares.
- A commission-free platform can still charge through spreads, subscriptions or foreign exchange fees.
- A stocks and shares ISA can reduce the tax cost of holding shares over time.
- The cheapest platform depends on portfolio size, trade frequency and account type.
Why the headline dealing fee is only the start
The cost to invest in shares often looks simple at first. A platform says it charges £11.95, £5.95, £0, or another visible dealing fee.
That number matters, but it is only one part of the bill. A long-term investor also pays through taxes, annual account charges and the price gap between buying and selling.
The dealing fee is easiest to compare because it appears before you trade. Hargreaves Lansdown, AJ Bell, Freetrade and Trading 212 all present that fee in different ways.
The harder part is working out the total cost across a year. A frequent trader with a small account faces a different bill from a buy-and-hold investor with £30,000 invested.
That is why the cost to invest in shares should be measured over the likely life of the account. One cheap trade can be outweighed by years of higher platform charges.
The four costs UK investors should count
The first cost is the dealing fee. This is the charge for buying or selling shares through your platform.
The second cost is Stamp Duty Reserve Tax, often shortened to SDRT. GOV.UK says SDRT is normally charged at 0.5% when you buy shares electronically.
That means a £4,000 purchase of most UK-listed shares carries a £20 stamp duty cost. The platform collects it automatically when the trade settles.
The third cost is the platform charge. This is sometimes called a custody fee, service fee or account fee.
The fourth cost is the bid-offer spread. The bid is the price buyers offer, while the offer is the price sellers want.
The spread is easy to miss because it is built into the price. A wide spread raises the cost to invest in shares even when the dealing fee is zero.
If you want the mechanics behind this hidden charge, Cristoniq’s guide to the bid-offer spread explains why smaller stocks can be expensive to trade.
How platform charges change the answer
Platform charges matter because they repeat. A one-off dealing fee is visible, but an annual percentage charge keeps taking a slice each year.
A platform charging 0.45% on a £30,000 share portfolio costs £135 a year before any cap applies. A 0.15% charge costs £45 on the same portfolio.
Some platforms cap share custody charges. That can make them more attractive once a portfolio reaches a certain size.
The cost to invest in shares therefore changes as your account grows. A platform that suits a £2,000 starter account may not suit a £50,000 portfolio.
Commission-free platforms can still make money in other ways. Common examples include subscription tiers, interest on cash, securities lending and foreign exchange markups.
None of that makes commission-free dealing bad. It simply means the comparison should include every charge you are likely to face.
Why tax wrappers can matter more than fees
A tax wrapper is an account type with special tax treatment. For many UK investors, the main wrapper is a stocks and shares ISA.
GOV.UK lists the ISA allowance at £20,000 for the 2026 to 2027 tax year. Money inside an ISA can grow free from UK income tax and capital gains tax.
Outside an ISA, tax can become part of the real cost to invest in shares. HMRC lists the annual capital gains tax exempt amount as £3,000 for 2026 to 2027.
Dividend tax matters too. GOV.UK says the dividend allowance is £500, and dividends from ISA shares are not taxed.
That makes the account choice a fee decision as well as a tax decision. A low dealing fee is less useful if avoidable tax drags on returns for years.
Cristoniq’s guide to tax on shares and investments explains the broader UK tax picture for investors.
How to compare the total cost to invest in shares
Start with your likely behaviour. If you plan to buy once a month, dealing fees matter more than they do for someone buying twice a year.
Next, estimate the portfolio size you expect to hold. Percentage platform fees become more important as the account grows.
Then think about the kind of shares you will buy. Large, liquid FTSE shares often have tight spreads, while smaller companies can have wider spreads.
Also check whether you will buy overseas shares. Foreign exchange fees can make an international trade more expensive than a simple UK trade.
The cost to invest in shares is best compared as a yearly estimate, not a single trade receipt. Add the expected dealing fees, stamp duty, platform fees and likely spread costs.
If you are still learning the basics, Cristoniq’s guide to reading share data on a UK platform is a useful next step.
A Worked Example
Suppose an investor puts £5,000 into two UK shares through a platform. They make two purchases and pay £5 per trade.
The dealing fees come to £10. Stamp duty at 0.5% adds £25, assuming both purchases are chargeable UK shares.
If the platform charges 0.25% a year, the annual platform cost is £12.50 on a £5,000 account. If the average spread cost is 0.4%, that adds about £20 when buying.
The first-year cost is therefore about £67.50 before any tax on gains or dividends. That is much higher than the £10 dealing fee shown at the start.
This is why the cost to invest in shares needs a full calculation. The small hidden numbers can matter more than the obvious fee.
What This Means For You
Do not pick a platform from the dealing fee alone. That figure is useful, but it is not the whole cost.
For a small starter account, commission-free dealing may be helpful. For a larger long-term account, custody caps and tax wrappers may matter more.
Before opening an account, write down how often you expect to trade and what you expect to buy. Then compare the full yearly cost.
The cost to invest in shares should be part of your plan, not a surprise after your first trade.
In Plain English
The cheapest platform is not always the one with the lowest dealing fee. It is the one that costs least for the way you actually invest.
Count the dealing fee, stamp duty, platform fee, spread and tax position together. That gives you the real cost to invest in shares.
Nothing in this article is financial advice. Tax rules change, and the figures used here can move over time. Check current HMRC rules or speak to a qualified adviser before making personal financial decisions.