Share Trading Need to Knows: A Practical UK Guide for Beginners (2025)

Investing in shares has never been more accessible in the UK, thanks to easy-to-use trading apps and digital investment platforms. But while buying a share of a company might only take seconds, understanding how share trading really works is crucial before you put any money at risk.

This guide reveals everything UK investors need to know before getting started—covering the basics, account types, trading platforms, taxes, and common mistakes to avoid.

What Is Share Trading and How Does It Work?

Share trading refers to buying and selling stocks of publicly listed companies. When you buy a share, you’re essentially purchasing a small ownership stake in that company.

If the company performs well or its share price rises, the value of your investment grows. You can also earn dividends, which are payments made to shareholders from company profits.

Shares can be traded:

• On the London Stock Exchange (LSE)

• On international markets (e.g. Nasdaq, NYSE, Euronext)

Trades are typically placed via:

• Stockbrokers

• Trading platforms or mobile apps

• Investment banks

What Are the Different Types of Share Trading Accounts?

Here are the main account types used by UK investors:

💡 Tip: For tax efficiency, use your ISA allowance (£20,000/year) before opening a GIA.

How to Start Trading Shares in the UK

Starting with share trading in 2025 is straightforward, but taking the right steps can help you avoid costly mistakes.

1. Choose a Trading Platform

Look for:

• FCA-regulated provider

• Low trading and account fees

• Access to UK and global markets

• Educational tools if you’re a beginner

Popular UK share trading platforms include:

• Freetrade – no commissions, user-friendly

• eToro – social trading features

• Hargreaves Lansdown – trusted, detailed research tools

• AJ Bell Youinvest – good for DIY investors

• Barclays Smart Investor – ideal for Barclays account holders

Compare UK stock brokers here

2. Fund Your Account

Use bank transfer or debit card. Some platforms allow instant deposits.

Example: If you bank with HSBC, you can fund a Hargreaves Lansdown or AJ Bell account directly from your HSBC current account within minutes.

3. Do Your Research

Always look into:

• Company fundamentals

• Price-to-earnings (P/E) ratio

• Past performance

• Market conditions

Tools like Morningstar, Yahoo Finance, or broker research portals are helpful.

4. Place Your First Trade

Decide how much you want to invest and choose a trade type:

• Market order – buys at current price

• Limit order – buys at a set price

• Stop-loss order – automatically sells if price drops below a set level

What Are the Risks of Share Trading?

Share prices can rise or fall quickly based on:

• Market sentiment

• Company news or results

• Global events (e.g. interest rate changes, wars, pandemics)

Unlike savings accounts, share investments are not guaranteed, and your capital is at risk.

That’s why financial experts recommend:

• Spreading investments across sectors and regions

• Avoiding panic selling during downturns

• Having a long-term outlook (5+ years)

Are Dividends Important?

Yes! Dividends can be a key source of passive income and form a large part of total returns over time.

Some UK companies with a track record of reliable dividend payments include:

• Unilever

• British American Tobacco

• Legal & General

• NatWest Group

Dividend income within an ISA or SIPP is tax-free.

What Are the Costs of Share Trading?

Fees vary by provider and trade type. Here’s a breakdown:

Barclays Smart Investor charges £6 per online UK share trade, while Freetrade offers commission-free trading.

How Is Share Trading Taxed in the UK?

Unless you’re investing through a tax-free account (like a Stocks & Shares ISA or SIPP), profits may be subject to:

• Capital Gains Tax (CGT) – on profits above £3,000/year (from April 2025)

• Dividend Tax – after a £500 annual allowance (2025)

Using an ISA protects your returns from both.

Common Mistakes First-Time Traders Make

Avoid these pitfalls:

• ❌ Investing based on hype (e.g. Reddit stocks)

• ❌ Putting all your money into one share

• ❌ Ignoring fees or foreign exchange costs

• ❌ Trading emotionally instead of logically

• ❌ Failing to diversify or rebalance portfolio

Always set a budget, invest gradually, and don’t risk money you can’t afford to lose.

Should You Use a Robo-Advisor or Trade Yourself?

UK Bank Examples Offering Share Trading Services

Some platforms also offer thematic investing, including ESG or tech-only portfolios.

Final Tips for Successful Share Trading

• 📚 Learn continuously – markets evolve, and so should you.

• 📊 Track performance – review your portfolio regularly.

• 💡 Stay patient – real returns often come with time.

• 🚨 Use stop-losses if you want to limit downside risk.

• ✅ Use your ISA allowance to keep profits tax-free.

Conclusion: Is Share Trading Right for You?

Share trading offers the potential for long-term wealth growth, but it’s not without risk. If you’re willing to learn, research companies, and accept market ups and downs, it can be a rewarding way to invest your savings.

Just start small, use the right account (ISA or SIPP), and pick a platform that suits your goals.