How to sell shares | A step-by-step guide for beginners (2024)

Knowing how to sell shares is an important step in the investing process. There may be cases where you hold onto stocks until you retire, or generously pass them down for someone to inherit. But if you’re trading stocks and shares over a lifetime, chances are you’ll plan on selling shares at some stage.

Before you get trigger-happy and start smashing that sell button, there are a few things to consider. Ideally, make sure you’ve got a decent grasp of the costs, what it means for your taxes, and importantly – whether you should be selling your shares in the first place.

How to sell shares

1. Make sure you definitely want to sell. A long-term “buy and hold” strategy can often lead to the most fruitful rewards.
2. Make a plan. It’s best to make a plan before going ahead with the sale. Once you’ve thought about how selling your shares will impact the rest of your portfolio, the rest of the process is very straightforward.
3. View your portfolio online and find the shares you want to sell. Most UK brokerages will allow you to sell shares online, on their website or using an app. This means you can carry out a sale right at your fingertips while sitting in your living room. If you’d rather make a sale over the phone, bear in mind that some investing platforms charge quite hefty fees for this service.
4. Review the sale. You’ll be able to see how much you’ll receive for your shares before you hit sell. When you’re ready, you can sell.

Our top picks for selling and purchasing shares

Make sure you have a clear understanding of why you want to sell your shares. Next, assess what it will cost and how this sale fits into your wider investing goals. Another key area to think about is whether the sale of your shares will affect your tax position.

You might be thinking about selling your shares for several reasons. Here are some examples of common situations explaining why investors sell stocks:

• The shares have consistently performed poorly, so you want to cut your losses.
• You find out new information about the company that changes your outlook for the shares.
• It’s a stock that no longer fits with your overall investing strategy.
• Selling shares allows you to consolidate your holdings and simplify your portfolio.
• Price appreciation means that you want to lock in some profit.
• To access cash, you sell shares to liquidate some of your holdings into pounds.

It can definitely make a difference. Each investing platform will structure its fees in a variety of ways.

With some platforms, a commission fee will be charged when you buy or sell an investment. This makes selling your shares more expensive with certain brokerages.

What often matters is where you’re buying the shares in the first place, because that will likely be the place you’ll eventually sell them – although it is possible to transfer your shares over to a new provider.

It’s worthwhile to do plenty of research to make sure you’re set up with an affordable brokerage account before you start investing.

Compare platforms that let you buy and sell shares

Table: sorted by promoted deals first

For most retail investors (which is the likes of you and me), this isn’t possible. You’ll need to use some sort of brokerage service or share trading platform to carry out your sale. An exception would be if you owned private equity shares and sold them directly to another investor. With this, the private company often has to approve the sale.

This depends on the investment platform you’re using.

A handful of platforms won’t charge you anything to sell shares. Most brokerages will charge some sort of commission when you make a trade. This could be a flat fee, no matter how many shares you sell. Or, it might be a percentage of the value of the trade.

This is why it’s important to think about things carefully first. If you want to go ahead with a sale and your broker charges a commission, it could be worth making your sale in one go to keep costs down, whereas if there are low or no commissions, you might decide to sell your shares in chunks at different times.

Possibly. The answer to this depends on the type of investment account you’re using to hold your shares and whether the price has gone up or down.

If you’re using a general investment account (GIA), you may have to pay tax on the sale. Each tax year, you get certain allowances to use up. Currently, in the 2023/2024 tax year, you have a capital gains tax (CGT) allowance of £6,000 and a dividend tax allowance of £1,000.

This means you only have to pay tax on gains made that breach these thresholds within the tax year. The tax won’t apply automatically – you’ll need to report it.

If you’re selling because the shares have dropped in value, you won’t have to pay tax because you haven’t made a capital gain.

If your shares are in an individual savings account (ISA), then you won’t be taxed on any profits you make, so long as you stuck to the annual allowance in the year you bought them, which is £20,000 and was £20,000 in every tax year from 2017/18. Additionally, when you want to withdraw funds after selling your shares, you won’t be subject to income tax if the money is coming from an ISA.

Similarly, if you have a SIPP (self-invested personal pension), you’re also able to sell shares held within the account without paying tax on gains. But, when you start withdrawing money from a SIPP, it may be subject to income tax.

Other scenarios where no tax is due when you sell your shares or bonds include:

• Giving your shares as a gift to a husband, wife, civil partner or a charity
• Shares in employer share incentive plans (SIPs)
• UK government gilts (also applies to premium bonds)
• Some corporate bonds

This depends entirely on the investments you own and what your goals are.

If you bought the shares as a long-term investment, you may only want to sell them once you’re ready to start using the funds in your portfolio.

There are other instances when you might want to sell shares earlier. This could be due to a shift in your personal circ*mstances or if something about the underlying stock changes.

The bottom line is that there is no single perfect time to sell your shares – it will depend on what makes the most sense for you.

Bottom line

There’s no perfect time to sell your shares. It’s all about how it fits in with the rest of your portfolio and investing goals. Setting yourself up with a cheap brokerage account can reduce costs and ensure you don’t pay more than you need to when the time comes to exit your position.

Before selling stocks or shares, ask yourself if you’re acting in line with your long-term financial goals. It’s best to avoid panic-selling. Equally, it is not a good idea to hold onto a floundering stock simply because you don’t want to sell at a loss. Try to keep emotions out of the equation and focus on what matters: your expectations for the company and your personal financial goals.

Frequently asked questions

• This can be possible when you use a market order with an online broker. Even though your sale will appear to go through instantly, it usually takes a couple of days for the brokerage to make the sale on the stock market. In particularly volatile times, it is unlikely to be executed immediately.

• This will be determined by a few factors. If you’re trying to sell above the current market price, there could be a delay. The time of day will also make a difference, because a sale made outside of normal trading hours usually won’t confirm and process until the following day.

• Yes, this is definitely possible. Doing this can also be a cost-effective solution if your broker charges you a fee or commission for each sale or trade. It’s important to think about the decision carefully first and make sure you’re aware of any tax implications.

• This can range from free all the way up to around £12 if you sell online or with an app. If you sell your shares over the phone, the cost can be much higher, reaching around £50 per sale with some brokers.

• Delisting happens when a listed security is taken off a stock exchange. Ouch. This can happen for a number of reasons, including:

  • Bankruptcy
  • A takeover or merger
  • The company chooses to go private
  • It fails to meet listing requirements (for example, by missing financial reporting deadlines or if the stock price falls below a cut-off)

  But there’s no need to panic. First, you should go to the company’s press releases page to get the scoop on what to expect next.

  Sometimes, the company will throw investors a life ring called a “tender offer”, which is an offer to buy back the shares at a predetermined price before the delisting takes place.

  However, if the music has already stopped and you are stuck holding shares in a delisted company, you might still be able to offload them on alternative markets, such as “over-the-counter” (OTC) exchanges. Be aware, though, that OTC exchanges are thinly traded, and the transaction costs are usually eye-wateringly high.

  It might be worth consulting with a financial professional who specialises in securities law if you have a large amount of money marooned in a delisted stock. They would be able to help you explore your options in depth.

• You can’t generally sell stocks outside of trading hours. Stock exchanges have specific trading hours during which buying and selling of stocks takes place. These trading hours are typically defined and regulated by the exchange on which the stock is listed. Outside of these windows of time, known as “after-hours” or “pre-market” hours, the stock market is closed.

  However, some brokerage firms offer limited after-hours trading options to eager beavers who just can’t wait to put in their sell order. So if you’re itching to sell after market close, it’s worth checking if your broker has out-of-hours trading functions.

  Stock trading hours from all time zones

  Stock exchange	Country	Time zone	Local trading times
  London Stock Exchange	United Kingdom	BST	8:00am to 4:30pm
  Frankfurt Stock Exchange	Germany	CEST	9:00am to 5:30pm
  SIX Swiss Exchange	Switzerland	CEST	9:00am to 5:20pm
  Euronext Amsterdam	Netherlands	CEST	9:00am to 5:30pm
  Madrid Stock Exchange	Spain	CEST	9:00am to 5:30pm
  Nasdaq Stockholm AB	Sweden	CEST	9:00am to 5:25pm
  New York Stock Exchange (NYSE)	United States	EDT	9:30am to 4:00pm
  Nasdaq Stock Market	United States	EDT	9:30am to 4:00pm
  Toronto Stock Exchange (TSX)	Canada	EDT	9:30am to 4:00pm

• A stop-loss order is like your guardian angel in the stock market. You set a price level, called the stop price, and if the stock hits or drops below that price, bam. Your order gets activated. It becomes a market order, and your broker will sell your shares at the best available price.

  Just keep in mind that the actual selling price may differ a bit due to market conditions. Stay on top of things and adjust your stop price as needed to protect your profits or manage your risk. It’s a handy tool to limit your losses and add some automation to your selling game.

  We explain more in our guide to trading orders.