How to buy Canadian shares in the UK
Canada’s stock market has a lot to offer investors – including a large economy, relative stability and new opportunities such as cannabis. If you’re considering buying Canadian shares in the UK, here are six steps to get started.
Choose how you want to buy Canadian shares
There are two ways to buy Canadian stocks in the UK: invest in them via share dealing, or trade them via CFDs and spread bets. Both offer exposure to the movements of Canadian share prices but they operate in different ways, and come with unique benefits and risks. Here’s a rundown of each:
Investing in Canadian shares
When you invest in stocks, you’re buying them outright and adding them to your share dealing portfolio. You pay commission to open your position and put up the full cost of the shares upfront.
There are two ways to profit from investing:
- By selling your shares for more than you paid for them
- By choosing companies that pay a dividend
A dividend is a portion of a company’s net profit that is returned to shareholders. If a stock you hold decides to pay $3 per share back to its investors, for example, you’ll get $3 for every share you own in the company. With IG, you’ll receive dividend payments directly into your account as soon as we receive them.
Why would I invest?
- You want to operate a ‘buy to hold’ strategy
- You usually take a medium- to long-term view
- You prefer sticking to fundamental analysis
- You only want to profit from rising markets or dividends
- You’re happy to pay the full value of your position upfront
One major reason to invest in stocks is that you can keep your share dealing portfolio in an Individual Savings Account. By doing so, you’ll shield your income and profits from capital gains tax (CGT). You can also keep your portfolio in a self-invested personal pension (SIPP) and pay no income tax or CGT on your investments. Stamp duty on international share dealing, meanwhile, is rare and charges are usually low.*
What Canadian shares can I invest in?
You can invest in any Canadian company that has a dual listing on a US exchange using your share dealing account. This gives you access to a wide range of blue-chip stocks – including nine of the ten largest Canadian companies by market cap – but it doesn’t include most stocks with a sole listing on the Toronto Stock Exchange (TSX).
Trading Canadian shares
When you trade stocks, you aren’t buying them outright. Instead, you’re speculating on their price movements – so you can profit from volatility without taking ownership of the underlying assets.
This brings two main benefits for traders. Firstly, you can go short as well as long. So if you think that a stock is due for a downturn, you can short it to make a profit from a fall in price. And second, you only have to pay a deposit called ‘margin’ to open your position. To trade $5000 in Royal Bank of Canada stock, for example, you might only have to pay $1000 upfront.
You will, however, pay overnight funding charges to cover the cost of maintaining your position over multiple days – you’ll pay these each night on rolling positions, or at the outset for share forwards. So if you’re planning on buying stocks and holding them over a long period, investing might be the better option.
Why would I trade?
- You want to go long and short
- You’re planning on taking a short- to medium-term view
- You’re interested in fundamental and technical analysis
- You don’t plan on profiting from dividends
- You want to trade on margin
You won’t own any shares when trading, so you can’t use an ISA or a SIPP. You don’t have to pay CGT on spread betting profits, however – and CFD losses can be offset against profits for tax purposes.*
What Canadian shares can I trade?
You can use CFDs to trade any Canadian company that has a dual listing on a US exchange, plus hundreds of stocks listed solely on the TSX.
Open a shares account
With IG, you can start CFD trading – when you open an account. You can open an account on our website or via our app in minutes.
Once your account is live, you can choose from over 12,000 companies and funds to trade or invest in, including a range of Canadian stocks that are listed on US exchanges. And if you need any help at all learning to use our platform, you’ll have access to dedicated 24-hour support.
Already own US-listed shares? You can transfer them to your IG account quickly and easily.
Complete a W8-BEN form
The W8-BEN form is required by the American Inland Revenue Service (IRS) for any individual who wants to buy shares through US exchanges. That means UK investors who want to buy Canadian companies that are listed on US exchanges will need to fill out a W-8BEN first.
The W8-BEN notifies the IRS that you aren’t a US citizen, so we can apply an individual tax benefit on your behalf. This can reduce the tax you pay on dividends from your US and Canadian stocks by up to 30%. You can complete the form on our online platform, so you don’t need to download or post anything.
If you’re only planning to trade US-listed shares via spread bets, you won’t need a W8-BEN. But you’ll need to fill one out to open positions on US stocks via CFDs.
Understand the charges to buy Canadian shares
If you’re looking to invest in stocks, then you’ll pay commission to open your position. You can use your IG account to invest in Canadian shares listed on US exchanges at our standard commission rate of £10. If you place more than three IG trades in a particular month, then you won’t pay any commission to open your position.
How much does it cost to buy US-listed shares from the UK?
|Standard commission||Best commission||FX conversion fee|
Data taken from competitor websites, correct at 05 April 2020.
You’ll need to buy Canadian shares on US exchanges in US dollars. When you open your position, we’ll automatically convert your pounds into dollars for just a 0.5% fee. There may be other charges, such as custody fees.
If you’re paid a dividend, it may be subject to a ‘withholding tax’. This is equivalent to your UK basic rate income tax liability, and exempts you from paying any further tax on your foreign dividends.*
For share CFDs, on the other hand, you pay commission. Neither incurs a currency conversion fee, but there may be other charges.
Choose the Canadian shares you want to buy
Next up, it’s time to decide which companies you want to buy. If you’re investing, then you’ll want to focus on Canadian stocks with a dual listing on a US exchange. Lots of blue chips are listed on both the TSX and the NYSE, so there are plenty to choose from.
You could, for instance:
Buy Canadian shares
The final step is to fund your account and buy your stocks. To find your chosen companies, simply log in to your account and search for them in the ‘finder’ bar.
If you want to open your position immediately at the best available price, you can use a market order. If you have a specific price in mind, you can use a limit order. With limit orders, we’ll open your position automatically when your chosen share hits the price you specify.
Buying Canadian shares summed up
- You can choose between investing or trading
- With IG’s share dealing service, you can buy any Canadian company with a dual listing on the NYSE
- You’ll pay commission to open an investment or CFD position, whereas spread bets are paid for via the spread
- Open an IG account to get started
* Tax laws are subject to change and depend on individual circumstances. Tax law may differ in a jurisdiction other than the UK.
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The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
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