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Shares: companies you own a piece ofrisk 4 of 5: high, can drop a lot

Domestic shares

Rules, protection and tax below are for United Kingdom.

What it is

Part ownership of a company. A share entitles you to a slice of the profits the company chooses to pay out, called a dividend, and to a vote at its meetings. Its price on the exchange is what other people will pay today for that slice of the future.

Over decades, owning a broad spread of companies has been the most reliable way ordinary people have grown money faster than inflation. Owning one or two companies is a different activity: the outcome depends on those particular businesses, and plenty of once-solid names have gone to nothing.

Shares in your own country are the easiest to buy, cheapest to hold and simplest for tax. They also mean your job, your house and your investments all ride the same economy.

How it works

  1. You open an account with a broker, which holds the shares for you and executes your orders on the exchange.
  2. You pay the price on screen plus the spread, any commission, and in some countries a purchase tax.
  3. Dividends land in your account when the company pays them; you can take them or reinvest.
  4. You sell whenever the market is open, at whatever the price is then, and any gain may be taxed.

The honest pros and cons

For

  • The highest long-run returns of the mainstream asset classes, historically.
  • Cheap to buy and hold, with no fund fee at all.
  • Dividends give an income that has tended to grow over time.
  • You can sell in seconds on any trading day.

Against

  • Single companies fail; a concentrated holding can lose everything.
  • Prices fall 30 to 50 percent in bad years, and you have to be able to sit through that.
  • Picking winners is much harder than it looks; most people underperform a plain index fund.
  • Everything you own may already depend on your home economy, so more of it adds no diversification.

Getting it in United Kingdom

Domestic shares available

London-listed shares are bought through any UK broker. Stamp duty reserve tax of 0.5 percent applies to purchases of UK company shares, though not to AIM-listed shares or to funds. Dealing charges range from nothing on app-based brokers to around 10 pounds a trade on traditional platforms, and shares are held for you in a nominee account.

  • Account type: Stocks and Shares ISA (gains and dividends inside are tax free)
  • Account type: General Investment Account (an ordinary brokerage account; dividends and gains above the yearly allowances are taxable)
  • Account type: Self-Invested Personal Pension (contributions get tax relief; money is locked until pension age)
  • Your protection: shares in a nominee account are ring-fenced from the broker's own money; if the broker fails and assets are missing, the FSCS covers up to 85,000 pounds per person (source, checked 2026-09-11)
  • Tax here: inside an ISA tax free; outside, dividends above the 500 pound allowance are taxed as dividend income and gains above the 3,000 pound yearly allowance at 18 or 24 percent (source, checked 2026-09-11)

How to start

  1. Open a Stocks and Shares ISA first; buying outside one only makes sense once the 20,000 pound allowance is used.
  2. Compare dealing charges and foreign exchange fees; app brokers are often free for UK shares.
  3. Buy in one go rather than many small trades if your broker charges per trade, and keep every contract note for tax.

Wherever you are

  1. Open a brokerage account, preferably inside whatever tax shelter your country offers.
  2. Decide whether you are buying a few companies you understand or a broad spread; if it is the spread, an index fund does it for you cheaply.
  3. Set a limit on how much of your total money sits in any one company; 5 percent is a common ceiling.
  4. Buy, record the price for tax, and stop looking at it every day.

Try it

Go deeper

Also called

stocks, equities, ações, acciones, common stock

Often confused with

  • Corporate bond: A loan to a company that pays interest; riskier than lending to a government because companies fail more often.
  • Foreign shares: Part ownership of a company listed in another country; currency moves affect your return too.
  • Stock index ETF: A fund traded on an exchange that copies a stock market index at low cost.
Domestic shares in United Kingdom · wealth-coop