If you're looking to tap into this profitable investment opportunity, stay tuned to explore how to buy shares in the UK alongside different ways to invest in shares. Shares are one of the most profitable investments in the United Kingdom.

When you buy shares with a company, you will become one of its shareholders, owning part of the company's ownership, and will receive a period payment known as dividends, which they can decide to reinvest. Your dividend depends on the company's achievement during the year.

According to The Independent, Diageo and Next are among the UK shares to watch out for in 2025 due to their successful business and dividend growth.

In most cases, you can't go wrong investing in shares to sell in the future. The UK's stock market, the London Stock Exchange, is one of the world's oldest and largest stock exchanges, ranked #3 by Investopedia.

Shares do not only offer part ownership of a company but also provide a high return on investment and give you a level of rights in the company’s decision-making process.

Whether you want to invest in shares this year or continue your initial investment, this article provides a comprehensive guide covering all essential details.

Factors to consider when choosing shares to buy

If you’re looking to buy shares in the UK, there are specific things you should consider alongside conducting careful research about the company. These include:

Conduct a comprehensive research

Feel free to explore investment factsheets to gain insights from different companies’ financial statements, helping you to know which shares are feasible.

You can visit the UK’s government official website to access the trade and investment factsheets, which can help you decide on the sector to invest in.

Other great ways to conduct research are to read current news and examine the financial reports of each company over the years.

Diversify your investment

If you’re new to shares, we recommend considering multiple investment options and buying assets, as even the most profitable shares fail due to uncontrolled reasons, such as product failure and decreased earnings.

According to Financial Synergies Wealth Advisors, you might get lucky for a year or two, maybe even five.

But that doesn’t mean you’ll end up the next Warren Buffett, an American businessman and philanthropist known for his investment success in stocks.

Be willing to keep your shares for many years

Consider investing in shares for a long period, such as five years or more, rather than keeping them for a year or two.

When you keep your shares for many years, you are more likely to get a higher return on investment. However, always bear in mind that a share’s value is not static and can go up or down depending on several factors.

Invest with a stocks and shares ISA account

A Stocks and Shares ISA account is a tax-free investment account that exempts you from the UK income tax or capital gains tax on money earned from investments, such as shares, bought via an Individual Savings Account (ISA).

Hargreaves Lansdown is one of the top providers of Stocks and Shares ISA accounts in the United Kingdom, with over 900,000 users.

You can invest up to £20,000 in a Stocks and Shares ISA account for the 2024/2025 tax year.

Two ways to invest in shares in the UK

You can invest directly in shares or indirectly through mutual funds, as explained below:

Invest directly in shares

You can buy shares directly from a publicly listed company, although it can come with higher risks than buying indirectly from a professionally managed investment fund.

If you are a highly experienced investor, you can be confident in carrying out your own research to determine which shares to buy.

Buying shares indirectly through mutual funds

You can also buy shares of an investment fund, which involves contacting a mutual fund company to connect with other investors to purchase securities such as stocks and bonds.

A mutual fund is a professionally managed investment ideal for newbies in shares.

Simple steps for buying shares in the UK

Are you new to the UK’s stock market or to investing in shares? Take the following steps to buy shares in the United Kingdom:

Be sure you want to invest in shares

Before anything else, make findings to decide whether buying shares is the type of investment you would like to venture into. Forecast possible risks and be prepared for whatever outcome your investment may have.

Develop an investment plan

Consider creating a plan to guide your investment in the UK’s stock market. These include setting goals and working out an efficient way to achieve them. Here are the most essential details to include in your investment plan:

• An evaluation of your current financial situation and the amount you want to invest
• The level of risk you can conveniently take
• The period of time you would like to keep your shares
• The investment or trading platform you intend to use
• Whether you have adequate knowledge about investing in shares in the UK or would like to contact a financial advisor

Open a trading account

Many trusted investment platforms are available in the United Kingdom, including Fidelity, eToro, Hargreaves Lansdown, Trading 212, and AJ Bell.

Compare them based on several factors, such as their reputation. Remember to confirm if your choice of investment platform is listed on the FCA register to ensure its legitimacy.

After choosing from the list, you can now set up a trading account on the platform, which often requires identity verification.

Transfer funds to your account

The next step is to add money to your trading account, which you can send from your bank account.

This step demonstrates your readiness to buy shares. Remember to buy only the amount of shares that you can afford.

Select the shares you want to buy and the specific amount

You will need to log in to your trading account from the chosen investment platform.

Once logged in, navigate to the trading section and select which company’s shares you want to buy.

Depending on your choice, you can invest in shares indirectly via mutual funds, which are managed by financial experts and come with fewer risks.

Alternatively, you can select your level of investment by either buying a specific number of shares or setting a fixed amount of money to invest in a particular company’s shares.

Buy the shares

After choosing the specific shares you want to invest in alongside your investment value, follow the prompts to confirm the trade. It should take only a few clicks or taps.

Track your investment portfolio

As an investor in UK shares, you will need to monitor the performance of your shares from the investment platform through which you purchased them. You can do this from your smartphone or PC, anywhere and anytime.

How many shares or worth of shares can you buy in the UK?

There is no limit to the number of shares and total value of shares you can own in the United Kingdom. But if you're buying shares using a Stocks and Shares ISA account, you cannot buy more than £20,000 worth of shares as of today (subject to review in April 2025).

Tax rates for buying shares in the UK

When you buy shares in the United Kingdom, you must pay a tax (Stamp Duty Reserve Tax - SDRT) or duty charge of 0.5% on the transaction.

Supposing you want to transfer shares into some depositary receipt schemes or clearance services, you will have to pay a higher tax of 1.5%.

The tax or duty applies to everyone buying shares electronically via an investment platform (website or app). If you’re buying in person by completing a stock transfer form, you only need to pay a stamp duty if the transaction exceeds £1,000.

Here’s a list of other transactions you must pay tax on relating to investing in shares in the UK:

• buying existing shares in a UK-incorporated company
• buying shares in a foreign company with a share register in the UK
• purchase of rights arising from shares
• buying an interest in shares
• purchasing an option to buy shares

Due to the significant advancements in the UK’s financial technology sector, you can now buy shares right in the comfort of your home and await returns on your investment.

While shares are highly profitable in the UK, it is important to know that the UK’s stock market is volatile but still better than that of the United States. If you seek tax exemption, consider investing in shares in a Stocks and Shares ISA account.

Yields from individual shares are variable, and returns are uncertain. There are many risks associated with it, which could cause you to lose some or all of your share capital.

Don’t hesitate to seek an expert’s financial advice or consider other investment options if you feel awkward about buying shares.