How Can UK Investors Invest in US Stocks?
The US stock market is home to some of the world’s most successful companies, from Apple and Microsoft to Tesla and Nvidia. But buying individual US stocks can be expensive and risky, especially with currency fluctuations (how USD affects on UK investors) and tax considerations for UK investors.
This is where Exchange-Traded Funds (ETFs) come in. ETFs allow UK investors to gain exposure to the US stock market without having to pick individual stocks.
In this guide, we’ll cover:
- Why invest in US ETFs from the UK?
- The best S&P 500, tech, and dividend ETFs for UK investors
- Tax implications of buying US ETFs from the UK
- How to invest in US ETFs through UK brokers
Quick Answer:
- The best US ETFs for UK investors include Vanguard S&P 500 (VUSA), iShares MSCI USA ETF (IUSA), and Invesco QQQ (QQQ) for tech exposure.
- Holding US ETFs in an ISA avoids UK tax but doesn’t eliminate US withholding tax on dividends.
- Investing through a UK-listed ETF is often more tax-efficient than directly buying a US-listed ETF.
1. Why Should UK Investors Buy US ETFs?
1. Diversification & Exposure to Global Leaders
- The US stock market accounts for over 60% of global equity markets.
- ETFs allow UK investors to access high-growth sectors like technology, AI, and healthcare.
2. Lower Risk Compared to Individual Stocks
- Rather than picking individual stocks, ETFs spread risk across hundreds of companies.
- ETFs like VUSA track the entire S&P 500, ensuring a balanced portfolio.
3. Lower Costs & Efficient Tax Treatment
- UK investors can avoid capital gains tax (CGT) by holding ETFs in an ISA.
- No stamp duty on ETFs, unlike UK shares.
2. Best US ETFs for UK Investors in 2025
1. Vanguard S&P 500 ETF (VUSA) – Best for General US Market Exposure
- Tracks the S&P 500, investing in the 500 largest US companies.
- Top holdings: Apple, Microsoft, Amazon, Nvidia.
- Dividend Yield: ~1.3%
- Ongoing Charge (Fee): 0.07%
Who should invest?
- UK investors looking for broad exposure to the US stock market.
- Ideal for long-term passive investors who want market-average returns.
2. iShares Core MSCI USA ETF (IUSA) – Alternative to S&P 500 ETFs
- Tracks the MSCI USA Index, slightly broader than the S&P 500.
- Top holdings: Apple, Microsoft, Google, Tesla.
- Dividend Yield: ~1.2%
- Ongoing Charge: 0.07%
Who should invest?
- UK investors who want a slightly different weighting from the S&P 500 but still broad US exposure.
3. Invesco QQQ ETF (QQQ) – Best for US Tech Exposure
- Tracks the Nasdaq-100, heavily weighted in technology stocks.
- Top holdings: Apple, Microsoft, Nvidia, Meta, Tesla.
- Dividend Yield: ~0.6%
- Ongoing Charge: 0.20%
Who should invest?
- UK investors looking for high-growth potential in AI, cloud computing, and semiconductors.
- Suitable for long-term investors willing to handle market volatility.
4. iShares US Dividend ETF (IUDV) – Best for Income & Dividend Investors
- Focuses on US companies with strong dividend histories.
- Top holdings: Johnson & Johnson, Procter & Gamble, Coca-Cola.
- Dividend Yield: ~3.2%
- Ongoing Charge: 0.25%
Who should invest?
- UK investors looking for regular income from stable US dividend stocks.
- Ideal for defensive investors who want steady returns.
5. SPDR S&P US Dividend Aristocrats ETF (SPYD) – Best for Long-Term Dividend Growth
- Invests in companies that have increased dividends for 25+ years.
- Top holdings: Johnson & Johnson, McDonald’s, PepsiCo.
- Dividend Yield: ~2.5%
- Ongoing Charge: 0.35%
Who should invest?
- Long-term passive investors focused on income growth over time.
3. How UK Investors Can Buy US ETFs
This is quite personal as it depends more on how you manage your money, how often you do transaction, etc, as the different providers will offer different pricing options. At the time, we have only tried a couple of them but researched about other options below mentioned.
Best Brokers to Buy US ETFs in the UK
- Hargreaves Lansdown – Great for long-term investors but has higher fees.
- Interactive Brokers – Low-cost trading for frequent ETF buyers.
- Trading 212 & Freetrade – Commission-free trading, best for beginners.
How to Buy US ETFs Step-by-Step
- Open an account with a UK broker offering US ETFs.
- Submit a W-8BEN form to reduce US dividend tax from 30% to 15%.
- Choose your ETF based on your investment goals (growth, dividends, broad market).
- Invest in US ETFs via an ISA to avoid UK capital gains tax (CGT).
4. Tax Considerations for UK Investors in US ETFs
1. Dividend Tax on US ETFs
- The US government withholds 30% tax on dividends, but UK investors can reduce this to 15% by filing a W-8BEN form.
- Holding US ETFs in an ISA doesn’t eliminate this tax, but it does prevent additional UK tax.
2. Capital Gains Tax (CGT) for UK Investors
- No US capital gains tax, but UK investors must pay CGT on profits above £3,000 (2024/25 tax year). Bear in mind that is when you realise a gain, so if you are not selling there is no reason to pay capital gains tax. You can read more in our tax guide for stocks and crypto investments.
- Holding ETFs in an ISA avoids CGT entirely.
3. Should UK Investors Buy US-Listed or UK-Listed ETFs?
- US-listed ETFs: More variety but subject to US withholding tax.
- UK-listed ETFs that track US indices: More tax-efficient but slightly higher fees.
5. Portfolio Strategy: How to Allocate US ETFs in Your Portfolio
For UK investors looking to diversify into US stocks, here’s an example ETF allocation:
| ETF Type | Example ETFs | % Allocation |
|---|---|---|
| Broad US Market | Vanguard S&P 500 (VUSA), iShares MSCI USA (IUSA) | 50% |
| Tech-Focused | Invesco QQQ (QQQ) | 20% |
| Dividend & Income | iShares US Dividend (IUDV), SPDR US Dividend Aristocrats (SPYD) | 20% |
| Cash/Gold for Safety | Physical gold ETFs | 10% |
Conclusion: What Are the Best US ETFs for UK Investors?
For UK investors, ETFs provide a low-cost, diversified way to invest in the US stock market.
- Best overall: Vanguard S&P 500 (VUSA) for broad US exposure.
- Best for growth: Invesco QQQ (QQQ) for high-growth tech stocks.
- Best for dividends: iShares US Dividend ETF (IUDV) for stable income.
To maximise tax efficiency, invest in US ETFs via an ISA and file a W-8BEN form to reduce dividend tax.
If you are not that much into ETFs and prefer to have a more individual stocks approach, you can always check our dividend stocks or growth stock challenges or simply have a look on other stocks reviews with potential growth.
Which US ETFs are in your portfolio? Let us know in the comments!
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