What does frequent trading cost, even in low-cost funds?

Fees to the firm you trade through

• A dealing fee. A flat charge for each buy or sell, set by the platform or broker. Some charge nothing to trade.
• Currency conversion. A fee arises when an investment trades in a different currency from your account. What a fund invests in does not decide this on its own, and a fund holding US dollar assets may still trade in pounds.

The spread

Each investment traded on an exchange has a buying price and a slightly lower selling price. The gap is the spread. Buying and then selling straight back costs roughly one whole spread, even if prices do not move.

The spread sits inside the price, so it never shows as a fee. The FCA calls it an implicit transaction cost, the result of how markets work rather than a charge anyone sets.

A tax and a levy on some shares

Buying existing shares in a company incorporated in the UK usually carries Stamp Duty Reserve Tax of 0.5% of the price. An investment trust incorporated in the UK is such a company, so buying its shares carries the tax.

Units in a qualifying exchange traded fund, or ETF, are exempt. So are shares in an open-ended investment company and units in a unit trust bought from the fund manager.

The PTM levy is £1.50 on each buy or sell over £10,000 in shares of a company the Takeover Code covers. It funds the Takeover Panel and is not a tax. ETFs and other open-ended funds are left out.

Capital Gains Tax, outside an ISA or a pension

Selling at a profit can create a taxable gain. Holding without selling does not. In 2026/27 the first £3,000 of gains in a year is tax-free.

Taxable gains are added to taxable income. The part within the basic rate band is taxed at 18% and the rest at 24%, using the same band in every part of the UK.

Selling shares and buying the same ones back within 30 days does not reset their cost for tax. The sale is matched with the shares bought back, not with the ones held before.

Costs inside the fund

A fund pays costs of its own when it buys and sells what it holds, and they come out of its value. Like the spread, they are not part of its yearly charge.

Under the FCA’s new rules on product information, a fund’s explicit dealing costs, such as broker commissions and stamp duty, are shown as a figure of their own beside its ongoing charge. Funds are moving to the rules now and may use their older documents until the rules apply in full. Pension products are outside them.

Who takes each cost

• The dealing fee goes to the platform or broker.
• A conversion fee goes to the platform or the firm it uses to change currency.
• The spread goes to market makers and others on the other side of the trade.
• Stamp Duty Reserve Tax and Capital Gains Tax go to HMRC.
• The PTM levy goes to the Takeover Panel.
• A fund’s own dealing costs go to brokers, market makers and HMRC, out of the fund’s value.

An illustration

These figures rest on assumptions, not typical prices, and they are not a forecast. The tax, the levy and the fund charge are the only figures read from published sources.

• A holding of £50,000 is sold and bought back in full each time.
• The dealing fee is £5 a trade.
• The spread costs 0.10% a round trip, one sale and one purchase.
• The fund’s yearly charge is 0.15%, or £75, the middle of what index funds and ETFs commonly charge.
• The investment trust is incorporated in the UK and has the same spread.
• In the dollar case, the ETF trades in dollars, the account is in pounds, and each conversion costs 0.5%.

One round trip in the ETF trading in pounds is £10 in dealing fees and £50 in spread, £60 in all. The trust adds £250 of tax on the purchase and £3 of levy, £313. The dollar ETF adds £500 of conversion, £560.

Trading the ETF in pounds once a month costs £720 a year, 9.6 times its £75 yearly charge. The figures leave out market movements and time out of the market.

Outside an ISA or a pension, suppose the year’s sales realise £5,000 of gains in 2026/27. After the £3,000 allowance, £2,000 is taxable. That is £360 if it all falls within the basic rate band, £480 if it all falls above it, or between the two if it straddles the band.

ISAs and pensions

Both remove Capital Gains Tax on the investments inside them. Neither removes dealing fees, spreads, conversion fees, Stamp Duty Reserve Tax or the levy.

• An ISA. There is no tax on income or capital gains from the investments in it.
• A registered pension. Gains on the scheme’s investments are free of Capital Gains Tax, but a scheme that carries on a trade pays tax on the income from it.

This guide informs. It does not advise anyone to trade more, trade less or use any product. What trading costs a particular person turns on their provider, what they hold, how often they trade and their tax position. MoneyHelper gives free, impartial guidance, and a regulated financial adviser can advise on your own case.

How Landfall handles it

Every charge is modelled as a yearly share of what a pot holds. Landfall has no separate place for a flat fee in pounds or a charge on buying and selling.

A draw from a taxable account counts as selling an equal share of everything in it, at its average cost, set by “Bought for”. Any gain meets capital gains tax on the UK bands, in every nation.