Investing In Shares

spike87

I am seriously considering investing in BP shares in the coming week. They're currently hovering just about the 400 mark so I've pretty much made my mind up that I'm going to put £1,000 in.

I've never done any share dealing before, but I have been following discussions on www.lse.co.uk.

I've heard of a few companies where you can buy shares but I'm just completely confused about which one is best for me. I have used my cash ISA allowance (£5,100) but I have nothing in stocks and shares. So I'm basically confused as to whether I should go the ISA route or stick to companies like X-O, iii or H&L. Going with X-O seems the cheapest at £5.95 per trade. Does this mean I buy £1,000 of shares, pay the fee of £5.95 and then when I come to sell in the future I sell them and only pay another £5.95?

Thanks for any help!

xrjtg

The main benefit of an ISA for holding shares is that you pay no capital gains tax on any gains within the ISA wrapper. If you can open an ISA or a non-ISA account for the same cost, then the ISA account is usually the right one to use first. You're understanding of the dealing fees with X-O is correct, but I don't know if there are other charges for having an account. There is also Stamp Duty of 0.5% to pay on UK share purchases.

chris_m

Don't know about the X-O ISA account, but the ordinary dealing only account has no charges beyond the dealing fees (and stamp duty) for straightforward dealing. IIRC they do charge for transferring shares in or out other than buying/selling through them.

spike87

With regards to capital gains tax, does it apply to all earnings on shares? For example, if I was to buy £1,000 of shares and sell them for £1,200, even just a small amount like £200 is liable for capital gains tax?

datostar

spike87 wrote: »

With regards to capital gains tax, does it apply to all earnings on shares? For example, if I was to buy £1,000 of shares and sell them for £1,200, even just a small amount like £200 is liable for capital gains tax?

You have a £10,100 annual allowance before any capital gains tax becomes due. If your annual gains are more than that the tax is payable on the excess amount, not the whole lot. Losses can be offset against gains. That is significant because when dealing shares you should expect losses as well as gains.

Reaper

spike87 wrote: »

So I'm basically confused as to whether I should go the ISA route or stick to companies like X-O, iii or H&L.

If you are not likely to use up your capital gains allowance (£10,100 profit pa) an ISA is not required, but you may choose to just for the simplicity of not having to declare it on tax forms. If you do then the broker firms you mention will set then up an ISA for you, usually for a fee. In the case of X-O it costs nothing until you take all the money out and close it down at which point it costs £50 (from memory). Though quite how they stop people just leaving £1 in it forever to avoid the fee I don't know!

Going with X-O seems the cheapest at £5.95 per trade.

The iii Portfolio Builder is cheaper still if you don't mind sacrificing real time trading.

Does this mean I buy £1,000 of shares, pay the fee of £5.95 and then when I come to sell in the future I sell them and only pay another £5.95?

Yes, plus stamp duty tax at 0.5% when you buy (but not when you sell) most shares.

spike87

I will not be buying shares too often (unless I become addicted to it) so I will look into the iii portfolio builder. Real time prices aren't needed so this looks the easiest and most cost effective way of doing it.

spike87

Just opened an account with http://www.x-o.co.uk and transferred in my money. Now I can't decide to go for it now or wait a while. There's talk of the share price for BP dropping again this week.

funscott

its like most things. if you wait for the newset thing to come out the next one will be out a few weeks later and you will never buy. i waited to buy bp from 360 ended up jumping in at 380 now sitting with small profit waiting for divident to return. Iv made more already than i would get in a bank in a year and cant see the share dropping below 395. i think it will hover round 400 - 415 for the next few weeks. accounts come out in november.

sunil1234

spike87 wrote: »

Just opened an account with http://www.x-o.co.uk and transferred in my money. Now I can't decide to go for it now or wait a while. There's talk of the share price for BP dropping again this week.

why dont you put a limit order in then?

thanks

spike87

I'm not sure how to do the limit order on X-O.

Can't believe the shares were sub 400 this morning and I missed it, they're back up to 405 now!