Best Social Trading Platforms November 2022

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There are various types of fees charged by trading platforms:

Share trading fee

This is a flat fee charged by a platform each time investors buy or sell shares. Some platforms do not impose a share trading fee and this is known as ‘commission-free’ trading).

Many trading platforms charge a flat fee of around £3-10 per trade. Trading fees are usually higher for US or other overseas shares.

Platform fee

This is an annual fee, sometimes called a custody fee, that’s charged for holding the shares on a trading platform. Our chosen trading platforms do not charge platform fees, other than IG for less-frequent traders (who make fewer than three trades per quarter).

In terms of the wider market, some platforms charge a flat platform fee and others charge a percentage-based fee, typically 0.25% to 0.45% of the portfolio value.

There are two types of percentage-based platform fees:

  • Tiered fee: this is the most usual type of platform fee, whereby investors pay different fees on different ‘slices’ of their portfolio. For example, for a portfolio worth £300,000, investors might pay 0.45% on the first £250,000, then 0.25% on the next £50,000.
  • Non-tiered fee: a few platforms charge a non-tiered fee, whereby investors pay the same fee across their whole portfolio. For example, if an investor has a portfolio of £300,000, they might pay 0.25% on the entire £300,000.

These fees will usually be taken out of any cash held on the account or can be paid directly by debit card. If unpaid, a provider – as a last resort – may sell shares held by investors to cover platform fees.

Check which types of investments incur a platform fee as some platforms charge for holding funds, but not shares. Platform fees that charge for holding shares may be capped at a maximum annual amount.

Foreign exchange fees

Most platforms charge a foreign exchange fee when investors buy or sell shares denominated in a currency other than pounds sterling. Also referred to as a foreign currency conversion fee, this typically varies from 0.1% to 0.5%.

A small number of platforms allow investors to hold foreign currency in their accounts, enabling them to convert it once and use this money for buying shares (and holding the proceeds from selling shares) in the local currency.

Other fees

Some platforms charge inactivity fees and withdrawal fees (for accounts held in an overseas currency) and fees for trading by telephone.

Although not technically a fee, platforms also make money on the buy-sell spread on shares. For example, an investor might be looking to buy a share with a buy-sell spread of 100-102 pence. This means that they would pay 102 pence to buy a share, and receive 100 pence to sell a share.

Some platforms may offer more competitive buy-sell spreads than others, and less-traded shares, such as FTSE Small Cap companies, typically have wider spreads compared with FTSE 100 companies.