Key takeaways
- Converting £10,000 into dollars costs £99 at Hargreaves Lansdown and £15 at Trading 212, the same conversion priced more than six times apart in August 2026.
- Custody on £100,000 of funds in an ISA runs from £71.88 a year at interactive investor to £350 at Hargreaves Lansdown, a £278 annual spread.
- MSCI World returned 13.29% a year gross and 12.73% net over the decade to 31 July 2026, and that 0.56-point gap is withholding tax.
- The UK-USA treaty caps withholding on portfolio dividends at 15% against a 30% statutory rate, and drops it to zero for qualifying pension schemes.
- A 1.98% round-trip FX charge spread over a 20-year holding works out at roughly 0.10% a year, under a third of a 0.35% custody fee.
Two people buy the same US-listed share on the same morning, and both put £10,000 in. One of them hands over £99 to turn the pounds into dollars. The other hands over £15. Same share, same day, same money — the only difference is which app they opened.
Neither charge appears in a fund's ongoing charge, on a factsheet, or in any cost comparison that stops at the expense ratio. You know what your funds charge. What you probably don't know is what it costs you to own them — what your platform takes for holding the position, for dealing it, and for turning your pounds into dollars, plus whatever a foreign tax office keeps from the dividend before it reaches you. So how big is that, really?
A UK investor holding overseas assets pays four tolls that sit outside the fund. What the platform charges to hold the position. What it charges to deal. What it charges to convert currency. And what a foreign tax authority keeps from the dividend before it ever arrives. All four are published, so you can count all four.
The counting is worth doing because the gaps between providers are wider than the gaps between funds. The arithmetic of a 0.2% fund fee against a 1% one over 30 years is well worn by now. The charges around the fund get less attention, and on a mid-sized portfolio some of them are bigger.
Platform fees: the same £100,000 costs £72 or £350 to hold
Start with the toll you pay simply for holding still. Platform custody is an annual percentage of what you own. It's the charge that compounds against your portfolio the way a fund fee does, and it's levied on your capital rather than on your gains. Here is what £100,000 costs inside a stocks and shares ISA, from four rate cards as at August 2026.
| Platform | £100,000 in funds | £100,000 in shares or ETFs |
|---|---|---|
| Hargreaves Lansdown | 0.35% = £350 | 0.35%, capped at £12.50 a month = £150 |
| AJ Bell | 0.25% = £250 | 0.25%, capped at £3.50 a month = £42 |
| interactive investor, Core plan | £5.99 a month = £71.88 | £5.99 a month = £71.88 |
| Vanguard | 0.15% = £150 | 0.15% = £150 |
That's a £278 spread on an identical portfolio, every year, for holding the same assets. On the shares column the spread is narrower in cash but stranger in shape. AJ Bell caps share custody at £42 a year, Hargreaves Lansdown at £150, and Vanguard applies its percentage with no cap until £375.
So which of them is cheapest for you? It depends entirely on how much you hold. Percentage charges reward big balances and punish small ones. Flat monthly fees do the reverse. Vanguard charges a £4 monthly minimum, £48 a year, on balances under £32,000, which is 0.48% on a £10,000 pot. interactive investor's £71.88 is 0.72% on the same £10,000 and 0.07% on £100,000.
And these numbers move under you. Hargreaves Lansdown cut its fund custody charge from 0.45% to 0.35% on balances up to £250,000 with effect from 1 March 2026, and cut online share dealing from £11.95 to £6.95 at the same time. AJ Bell restated its ISA card on 10 July 2026. Anything quoted here is a snapshot, not a constant.
Dealing: free by direct debit, £6.95 as a one-off
Dealing charges look trivial until you divide them by a small contribution. Hargreaves Lansdown charges £6.95 a share trade for anyone who placed 0-19 trades the previous month, £3.95 above that, and £1.95 for a one-off fund purchase. AJ Bell charges £5 a share deal, £3.50 for anyone who placed ten or more deals the previous month, and £1.50 for funds. interactive investor charges £3.99 a UK or US trade on Core and Plus, £2.99 on Premium.
Say you pay in £500 a month. At £6.95 a trade that's 1.39% gone before the money is invested. But Hargreaves Lansdown and AJ Bell both charge nothing for regular monthly investing by direct debit, and Vanguard charges nothing to deal funds or ETFs at all. So the same £500 costs you either 1.39% or nothing, depending only on which route you used. That's also why the choice between annual rebalancing and 5% tolerance bands is partly a dealing-cost question rather than purely a risk one.
FX charges: £15 or £99 for the same trade
Back to the two buyers at the top, because this is where the numbers get strange. Every platform converts at roughly the same wholesale rate, then adds a margin. The margin varies by a factor of more than six.
| Platform | FX charge on a purchase | Cost of converting £10,000 |
|---|---|---|
| Hargreaves Lansdown | 0.99% to £10,000, 0.50% to £25,000, 0.20% above | £99.00 |
| AJ Bell | 0.75% to £10,000, 0.50% to £20,000, 0.25% above | £75.00 |
| interactive investor, Core plan | 0.75% | £75.00 |
| interactive investor, Premium plan | 0.25% | £25.00 |
| Trading 212 | 0.15% on the spot rate | £15.00 |
The tiers blend, so bigger trades cost proportionally less. A £25,000 purchase costs £174 at Hargreaves Lansdown, an effective 0.70%, and £137.50 at AJ Bell, an effective 0.55%. At Trading 212 it's a flat £37.50.
Two details do more damage than the headline rate. The charge applies again on the sell leg, so if you buy £10,000 of a US share through Hargreaves Lansdown and later sell it, the full round trip comes to close to 2%. And it applies to every contribution separately, so if you buy monthly you pay the top band every month rather than blending down into the cheap tier.
Is there a way out of it? There is, and it's structural rather than clever. AJ Bell's card applies its FX charge to "international dealing and foreign currency funds". Hargreaves Lansdown applies its charge to overseas deals and to income received in foreign currency. A holding that's quoted and settled in sterling triggers neither, because no conversion happens on your side of the transaction. The underlying assets can still be entirely American, and the fund still carries the currency risk. It just doesn't hand a retail spread to the platform on the way in.
The dividend conversion charge is genuinely small
Foreign dividends arrive in foreign currency and get converted too, and platforms charge for that separately. Hargreaves Lansdown adds a 1% spread to the prevailing interbank rate on amounts received in foreign currency. AJ Bell charges 0.50% when it converts dividends or corporate action payments. Trading 212 says its FX fee doesn't apply to payments arising from corporate events such as dividends.
Scale it against the income you actually receive and it shrinks. The MSCI World Index yielded 1.53% at 31 July 2026. A 1% spread on that income is about 1.5 basis points a year. AJ Bell's 0.50% is under one basis point. This charge is noise, and any piece that lists it alongside custody as though the two were comparable is overstating it.
Withholding tax is the charge nobody bills you for
The largest of the four is the one that never appears on your statement. Foreign governments deduct tax from dividends before they leave the country, and the money is simply gone from the fund's return. You will never see a line for it, and nobody will ever ask you to approve it.
MSCI publishes the size of it directly. Its indices come in gross and net versions, identical except that the net series reinvests dividends after withholding tax. Over the ten years to 31 July 2026, MSCI World returned 13.29% a year gross and 12.73% net. The gap is 0.56 percentage points a year. Over five years it was 0.51 points, over three years 0.50.
Before you subtract that from your own returns, though, it needs a large qualification.
That gap is an upper bound, not a bill. MSCI's calculation methodology applies "the maximum rate applicable to non-resident institutional investors who do not benefit from double taxation treaties". For US dividends that means the 30% statutory rate. Say you're a UK resident holding an Irish-domiciled fund instead: you're entitled to 15% under Article 10(2) of the relevant treaty, and the IRS treaty table gives 15% for the United Kingdom, Ireland, Germany, France and Switzerland alike. A treaty-eligible holder pays roughly half of what the net index assumes.
Half of 0.56 points isn't nothing. Working it the other way, 15% of a 1.53% yield is 0.23% a year, which is larger than most global tracker fees. The caveat cuts both ways. That 0.56-point gap was measured across a decade when yields ran higher than 1.53%, so it isn't a forecast, and today's lower yields mechanically shrink the drag.
So does your wrapper rescue you? Partly, and not the way most people expect. Article 10(3) of the 2001 UK-USA convention drops the rate to zero where the beneficial owner is a qualifying pension scheme. A SIPP holding US shares directly can receive those dividends gross. An ISA can't, because the exemption belongs to pension schemes rather than to tax-free savings accounts. And a US-exposed ETF held inside a SIPP still suffers 15% at fund level, since the treaty benefit attaches to the fund's Irish domicile rather than to your wrapper. How much of this bites depends on how much of a portfolio's equity sits abroad, which for most UK investors is now the majority of it.
Stamp duty runs the other way
One cost pushes back against all of this, and it lands on the investor who stayed at home. Buying UK shares electronically triggers Stamp Duty Reserve Tax at 0.5% of the consideration. AJ Bell's card puts it at 0.50% on UK quoted shares and 1.00% on shares quoted on the Irish Stock Exchange, with a £1.50 Panel on Takeovers and Mergers levy on equity trades above £10,000.
There's no stamp duty on foreign shares bought outside the UK, and none on ETFs, open-ended investment companies, unit trusts or gilts. So the domestic share buyer pays 0.5% up front and no FX margin, while the overseas buyer pays up to 0.99% in FX and no stamp duty. The two are closer than the framing of hidden overseas costs suggests.
The case against caring about overseas investing costs at all
Here is the objection, and it has real force. These charges are small, mostly one-off, and get over-weighted by writing that's looking for something to be indignant about. The arithmetic supports that view more than cost-focused pieces usually admit.
So take the worst case above and run it out properly. Imagine you buy £10,000 of a US holding through Hargreaves Lansdown, hold it for 20 years, and then sell. The conversion on the way in and the conversion on the way out cost roughly 1.98% of the position across the round trip. Spread over those 20 years, that one-off hit is equivalent to about 0.10% a year. It's less than a third of the same platform's 0.35% custody charge, and a rounding error next to a decade of equity returns. Critics of cost writing argue that quoting 0.99% invites you to treat a one-time charge as an annual one, and on a buy-and-hold position that's exactly what happens. The dividend conversion charge, at 1.5 basis points, deserves even less airtime than it gets.
So where does the objection weaken? On recurrence. Three of the four tolls repeat. Custody is charged every year on your whole balance, whatever markets did. Withholding is taken from every dividend, and no wrapper except a pension recovers it. And FX is charged on every contribution rather than once. Pay £500 a month into a US-listed holding at Hargreaves Lansdown and the conversion costs you £4.95 each time — £59.40 across a year on £6,000 invested, or 0.99% of everything you paid in. The one-off charge you were told to ignore has quietly become an annual one, because you kept buying.
The second weakness is that charges are levied on your capital while your returns aren't guaranteed. A 0.35% custody fee is 0.35% of the balance in a year when equities fall 20%, and it's still 0.35% in a flat decade. Cost is one of the few variables you know in advance, which is why the 20-year SPIVA record on active funds keeps returning to it.
The FCA reached a similar place from a different direction. Its 2019 investment platforms market study found charges on £5,000 in a stocks and shares ISA ranging from 20 basis points to 240 basis points, a potential £650 difference in returns over five years at 5% compound growth. It also counted at least 11 different terms in use for a platform fee, among them investor fee, custody charge and annual commission. Those figures are seven years old and rate cards have fallen since, so the range is evidence that dispersion exists rather than a current price list.
What would change the overseas investing costs conclusion
Four things would change the conclusion, and one of them is already happening.
Rate cards keep falling. Hargreaves Lansdown cut its top FX band from 0.25% to 0.20% and its fund custody charge from 0.45% to 0.35% in March 2026. If that continues, the gap between £99 and £15 narrows and the custody argument loses most of its force. Everything quoted here is as at 5 August 2026 and has a short shelf life.
Yields do the same job on withholding tax. At a 1.53% yield and a 15% treaty rate the drag is 0.23% a year. At a 3% yield it would be 0.46%. The direction of dividend yields matters more to this number than any policy change.
How you build the portfolio can zero out most of it. A portfolio held entirely in sterling-quoted accumulating funds pays no platform FX margin at all, on purchases or on income. If that describes you, the whole currency section above is irrelevant, and only custody and withholding are left to think about.
And one figure here isn't verified as well as it should be. The 0.56-point gross-to-net gap is an index proxy, not a measurement of what a specific UK-available tracker loses to withholding tax. Fund annual reports disclose tax charges, but not in a form that isolates the treaty benefit cleanly. A fund-level disclosure showing withholding suffered against the statutory alternative would settle it far better than an index construction rule, and I couldn't find one published in that form. US investors meet the same problem in a different place, where the backdoor Roth is priced by balances held elsewhere.