Online Share Dealing

Online Share dealing (also known as online share trading) isn't as complicated as it seems. Stockbrokers often use the internet to let investors buy and sell their shares more easily and more quickly than conventional methods would allow. In fact, it's exactly the same as buying and selling stocks and shares via a stockbroker but a share dealer uses online software to action the transactions almost instantly.

By the end of 2006 a report by The Compeer showed that there were over 766,540 people participating in online share dealing. Users register to specific companies which have a share dealing platform or interface and buy or sell shares through a website. Conventionally we would sell or buy shares through our bank, building society or stockbroker, but with online share dealing buying and selling shares is made much easier and faster.

Costs

The fees charged by online banks and brokers do vary. You may need to pay:

• 0.5% Stamp Duty on purchased shares
• A fixed transaction fee each time you perform a trade
• Regular subscription, administration or account charges

You must pay stamp duty reserve tax on all your share purchase transactions in the UK and any purchases over £10,000 will also incur a charge (the PTM levy) which is a flat rate of £1 and is collected by The Panel of Takeovers and Mergers.

If you choose to sell some shares you won't be charged anything for the privilege, but you could be charged capital gains tax on the money you receive. You could also have to pay costs associated with online share dealing such as account management fees.

Choosing a Stockbroker

The types of share dealing which consumers do online is called 'execution-only' trading, this means that what a share dealer chooses to buy or sell are the sole responsibility of the share dealer and your broker remains unaffected. There are huge risks associated with online share dealing as stocks can go down in value as well as up and as such it's important that you use online services which are reputable and reliable.

Each online broker will offer a different set of services and charge a different amount of money to provide these. Some brokers offer you the chance to invest in more than just the main market UK shares but might charge some higher fees for this whilst others appeal novice share dealers.