Halifax Share Dealing Review – Similar To Lloyds With SIPP On Top

Halifax Share Dealing Review

Category Ranking

3.9

GOOD

LAGGER
FAIR
GOOD
EXCELLENT
<2.5
2.5-3.5
3.5-4.5
4.5-5.5

CATEGORY: BANK

AVAILABILITY: UK ONLY

BROKER SCORE

4.0

/5

Category Ranking

3.9 GOOD

LAGGER
FAIR
GOOD
EXCELLENT
<2.5
2.5-3.5
3.5-4.5
4.5-5.5

CATEGORY: BANK

🌎 UK ONLY

BROKER SCORE

4.0

/5

Our take: Halifax is an old school yet cost-efficient platform for regular investors with good ETF availability. It is an excellent option for investors wanting to sleep tight given the standing of the Lloyds Banking Group in the UK. As a plus compared to Lloyds Share Dealing (its brother), offers SIPPs and a mobile app that it is opened to every one. 

Our assessment: Halifax Brokerage business scores 4.0 on an absolute basis, given the support of the systemically important bank and competitive fees for regular investing. It scores a bit lower at 3.8 in its category, as all its peers are large Banks, so bank safety plays a second role to fees, which are high outside of regular investing service and platform.

Is it suitable for you?

  • Passive Investors: The financial stability of the company, along with the low custody fees, ease of establishing automated and free investments via monthly standing orders, as well as the good choice of products, enhance its appeal for buy-and-hold investors in plain vanilla ETFs.
  • Semi-Active Investors: The selection of stock exchanges and foreign products is satisfactory, but the fees for investing in international stock exchanges and currencies may seem high. The lack of junior accounts can also be annoying for some.
  • Advanced Investors: Halifax Share Dealing lacks in offering leverage and features like access to US ETFs, which could limit those looking to expand their investment strategies. However, it does give access to the bond markets. Additionally, active investors may find the trading costs dissatisfying, and the investment platform may be considered outdated.

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Pros & Cons and suitability

Pros & Cons

Suitability

VERY Suitable

SIMPLE, reputable, competitive

Suitable

Good Product offer but high FX fees, and high fees for non-regular investing

SOMEWHAT Suitable

Lack of Advanced Features

Availability

Halifax Share Dealing is only Available in the UK

Broker Snapshot

Halifax Share Dealing Is Part Of A Traditional Banking Group

Halifax Share Dealing is the investment platform for the Halifax Bank, a branch of the Lloyds Banking Group. The group is a major and historically significant financial institution in the UK, listed on two stock exchanges and rated by three rating agencies. In addition, Halifax Bank of Scotlands (HBOS) is also rated, with a notch or two above its parent. As of April 2024, Lloyds Group was valued at £33 billion. Halifax Share Dealing belongs to a bank that has been in the industry for centuries and has a transparent fee structure, making it competitive towards Tier 1 brokers like Hargreaves Lansdown and much more affordable than brokers from similarly large, established banking groups like HSBC Invest or Barclays. However, since brokerage is non-core to Lloyds business, the platform is less modern and advanced compared to (pure-play) Tier 1 brokers.

Long standing Bank, Externally Rated and With a listed parent

HBOS (Halifax Bank of Scotland) has an IG rating from S&P, Moody’s, and Fitch, and is a leading and highly profitable financial institution in the UK. Since 2009, it is fully owned by Lloyds Banking Group, the second oldest banking institution in the UK. Like all brokers, it offers client protection up to £85,000 under the Financial Services Compensation Scheme and is regulated by the FCA.

Company Info

CharacteristicHalifax Share Dealing
Inception Date🛈 1853 (Share Dealing 1997)
Headquarters🛈 Halifax, Yorkshire
Key Owner🛈 Lloyds Group
Bank Affiliated✅ Yes
Listed on Stock Exchange✅ LSE / Nasdaq: $40.91bn (LLOY/LYG)
Parent Rating✅ S&P BBB,
Moody A1, Fitch A (HBOS)
Operating Profit✅ £22.01 M

Regulation

FeatureHalifax Share Dealing
EU Entity🛈 None
UK Entity🛈 Halifax Share Dealing Limited
Key Regulators✅ UK
EU Regulator N/A
UK Regulator✅ UK (FCA)
EU GuaranteeN/A
UK Guarantee🛈 Max. £85k

competitive fees, high eTF availability and low custody fees

Halifax Share Dealing, which shares a platform with Lloyds and iWeb, offers extensive ETF and international stock exchange access. The fee structure is appealing if you use the regular investing service or the monthly trade offer. Accounts earn interest on cash on SIPPs only, and high foreign exchange rates make trading in international products less advantageous.

Features

FeatureHalifax Share Dealing
Key Base Currencies🛈 GBP
ETF Availability✅ High (700)
Multicurrency❌ Not Available
Cash Interest✅ SIPP only
Margin Loans❌ Not Available
Exchanges✅ LSE, Nasdaq, Major European
Security transfer✅ Yes
External PFOF Reliance✅ None

Fee Structure

FeatureHalifax Share Dealing
Custody Fees✅ Low
Inactivity Fees✅ None
ETFs Dealing Fees✅ None (for regular investing)
FX Fees⚠️ High
Deposit Fees✅ None (a part SIPP)
Withdrawal Fees✅ None
Security Lending🛈 Not Available

I. Company

Halifax Share Dealing has a well-established, listed, and two IG rated Banks within the Group through direct holding structure. The Lloyds Group Bank, to which belongs, is a  systemically important institution (O-SIIs) in the UK and has been bailed out during the GFC. Despite its solid financial standing, it has been involved in some scandals in the past few years, which did not affect the brokerage business clients.

Business Profile

Halifax Share Dealing operates exclusively in the UK and, as a tax-efficient account, offers ISAs and SIPPs. While the platform is open to anyone, it easier for customers with a Halifax Bank account to open a Share Dealing Account and transfer funds. In addition, Halifax Share Dealing fully operates Lloyds Share Dealing and it runs iWeb Share Dealing. The company is relatively transparent about its revenue sources, primarily earning through cash interest (not shared with investors with the exception of SIPP accounts) and transaction fees (if you do not use the regular investing service). FX fees are also high, making it another form of income for the company. Information related to assets under administration and the number of customers is not separated from those of the group; therefore, they are not publicly available.

However, the Company reported an increase in revenue by 25% to £55.5 million in 2022 from £44.5 million in 2021, despite a 27% reduction in trading volumes compared to the previous year and the profit after Tax grown from £13.8 million in 2021 to £22 million in 2022.

Ownership and Transparency

Halifax, initially a building society founded in 1853 in Halifax, West Yorkshire, grew by merging with other societies, notably the Leeds Permanent Building Society in 1995. It demutualised to become Halifax plc in 1997. In 2001, Halifax plc merged with the Bank of Scotland to form Halifax Bank of Scotland (HBOS). This merger aimed to combine Halifax’s strength in consumer banking with the Bank of Scotland’s business banking capabilities. The 2008 financial crisis significantly impacted HBOS, which suffered heavy losses due to its exposure to high-risk mortgages. In 2009, Lloyds TSB acquired HBOS, creating Lloyds Banking Group, one of the largest banking entities in the UK. This acquisition was facilitated by the UK government, which ended up holding a significant stake in the merged entity to stabilize the banking system.

Halifax Share Dealing was established under Halifax Group in 1997 to offer stockbroking services, enabling trading of shares on UK and international exchanges. It expanded to include various investment products like ISAs and SIPPs. The company is registered in England and Wales and is authorized and regulated by the Financial Conduct Authority. As part of Lloyds Banking Group, it benefits from the group’s extensive resources and market presence.

Lloyds Banking Group PLC, listed on the London Stock Exchange under the ticker LLOY, and on the NASDAQ under the ticker LYG holds a significant presence in the financial sector. Like its parent company, HBOS has an IG rating from all three rating agencies. As of April 2024, Lloyds Banking Group has a market capitalisation of $40.91 billion. It is also part of FTSE 100. In 2023, the company reported a profit after tax of £5.5 billion, a increase of £1.5 billion compared to 2022.

Safety Considerations

The credit rating is in the high BBB or A category, which implies a very low estimated probability of default, as measured by historical 10-year peer cohort probability of default. Based on historical data, a couple of 100 similarly rated financial companies went out of business over a 10-year period. Additionally, there is a precedent of the Lloyds Group and HBOS being rescued by the UK government. In September 2008, at the height of the financial crisis, Lloyds TSB agreed to acquire Halifax Bank of Scotland (HBOS) that was on the verge of collapse due to its exposure to the failing mortgage market and a resultant liquidity crisis. This deal was encouraged by the UK government, which was desperate to prevent the systemic failure of the banking system. In 2009, the State acquired about 43% of total ownership, which was then fully resold to private shareholders by mid-2017. Lloyds is a systemically important institution (O-SII) in the UK.

Regulation & Investor Compensation Schemes

The Financial Services Compensation Scheme protects up to £85,000 per institution in event of firm failure.  Importantly this is per customer per institution. 

Share & Cash Custodians

Equiniti Financial Services Limited is both the cash and share custodian. Personal CREST accounts are not supported.

Reputation

Where Lloyds group has in general a solid reputation, it has been involved in several other controversies, including facilitating sanction evasion for Iranian entities or accusations of tax avoidance. The bank was also connected to the HBOS Reading fraud scandal. More recently, its overdraft fees policy was criticized for not aligning with regulatory recommendations. 

As for HBOs, in 2015, investigations by the Prudential Regulation Authority and Financial Conduct Authority identified failures in HBOS leading to its bailout. They criticized the bank’s executives and the then-regulator, Financial Services Authority (FSA), for poor oversight. Key causes included a corporate culture that inadequately balanced risk and return, a flawed strategy focused on rapid asset growth and market share, and a lack of challenge from the board to executive management’s risky practices. Additionally, in 2019, the Bank of Scotland was fined £45.5 million for failing to report fraud suspicions at its Reading branch.

II. Fee structure

Halifax Share Dealing offers a straightforward fee structure favorable for investors who use the regular investing service. It is competitive across all account types. However, its FX rates are high compared to the market.

Platform fees

Halifax Share Dealing’s fee structure is designed as follows:

  • For Share Dealing ISAs and Share Dealing Trading Accounts: £36 a year. If you have both accounts, Halifax charges you just once. 
  • Invest Wise and Invest Wise ISA Accounts (18-26 years old only): no charge.
  • SIPP: quarterly account charge of £22.50 if the SIPP value is £50,000 or less, and £45 if the value is above £50,000)

Trading Commisions

Halifax Share Dealing trading fees are as following:

  • Trading Fees: flat rate of £9.5 per transaction. For other markets, the charge is £0 but with 1,25% of FX fees. For frequent investors (more than 8 transactions a month), the transaction is £8 per trade. 
  • Mutual Fund Trading Fees: £1.50 per trade. 
  • Regular Trading Fees: always free. 
  • Happy Hour Reduced Commission: UK shares between 12:15PM – 2:15PM at £3.50 per trade in selected days. Happy hour! But only once a month.
  • Dividend Reinvestments: 2% of dividend (max £9.50 per stock).
  • SIPP Drawdown Charges:
    • Flexi-access drawdown: £180 per annum.
    • Capped drawdown:
      • Before age 75 – £180 per annum.
      • Age 75 onwards – £300 per annum.
      • An additional £90 fee will be charged to move from a capped to a flexi drawdown. 

Overall Fee Simulation vs Competitors

Most of our readers have simple Index portfolios. Using our Broker Total cost calculator, you can estimate the total cost of holding ETFs throughout the investment period. For our simulated scenarios:

  • General Accounts – Halifax Share Dealing comes out competitive.
  • ISAs – Halifax Share Dealing comes out competitive.
  • SIPPs – Halifax Share Dealing comes out competitive
We compared it against Barclays (another established bank) and Hargreaves Lansdown as a representative of Tier 1 Brokers with a good ETF offer.

Fee Simulation For General Accounts

In the below simulation, a 20-year accumulation period broker bill for a Halifax Share Dealing account comes out at £720. The cost is £0 for Hargreaves Lansdown as the broker does not charge any custody fees for ETFs and £5,860 for Barclays Smart Investor. For all three brokers the calculator assumes the use of regular trading service that is free. Note that ISAs and General accounts have the same cost for both Halifax Share Dealing and Barclays Smart Investor. 

Investor assumptions

Model FeatureAssumption
InvestorUK
InstrumentUCITS ETF
AccountGeneral
Initial Investment£ 100,000
Monthly£ 1,000
Time Horizon20 years
Gross Return8%

Total Fees

Fee Simulation For ISAs

In the below simulation, a 20-year accumulation period broker bill for an ISA account comes out at £720 for Halifax Share Dealing, £900 for Hargreaves Lansdown, due to yearly custody fees capped at £45, and £5,860 for Barclays Smart Investor. As for General Account, for all three brokers, the calculator assumes the use of the regular trading service, which is free.

Investor assumptions

Model FeatureAssumption
InvestorUK
InstrumentUCITS ETF
AccountISA
Initial Investment£ 100,000
Monthly£ 1,000
Time Horizon20 years
Gross Return8%

Total Fees

Fee Simulation For SIPPs

In the below simulation, a 20-year accumulation period broker bill for a SIPP account comes out at £3,600 for Halifax Share Dealing, £4,000 for Hargreaves Lansdown and £8,835 for Barclays Smart Investor. As for General Account, for all three brokers, the calculator assumes the use of the regular trading service, which is free.

Investor assumptions

Model FeatureAssumption
InvestorUK
InstrumentUCITS ETF
AccountSIPP
Initial Investment£ 100,000
Monthly£ 1,000
Time Horizon20 years
Gross Return8%

Total Fees

Currency Exchange fees

Halifax Share Dealing’s currency exchange fees are high at 1.25%.

Other fees

Deposits and withdrawal are free of charge.

For SIPP, there are £60 transfer in per plan capped at £300. No exit fees.

III. Platform & Features

Like Lloyds and iWeb, Halifax Share Dealing has a straightforward – but old-school – interface, ideal for beginners. It offers access to various international stock exchanges and a diverse range of products. However, the platform may feel outdated and could be restrictive for advanced investors. Like iWeb, Halifax Share Dealing pays interest on cash held in your SIPP accounts only. It offers a Mobile App that although is simple, it is available for everyone (conversely from Lloyds). 

Account Opening Process

Opening an account with Halifax Share Dealing is straightforward if you have already a ban account with HBOs. Otherwise it will take longer since you will have to wait to receive your credentials by post. 

account Features

Halifax Share Dealing shares the same investing platform as Lloyds and iWeb and offers several great features for Long-Term Investors:

  • Foreign Stock Exchange: NYSE, NASDAQ, Xetra and Euronext (Milan, Amsterdam, Paris, Brussels).
  • Standing Orders: those are particularly advantageous because they do not incur in trading fees. 
  • Free Share Transfer
  • Mobile App: if you do not have a Halifax bank account, you will have to first register (although you do not need to open a bank account). 

Internalisation and PFOF

PFOF is not allowed in the UK therefore Halifax Share Dealing does not engage in this practice. 

Cash Interest

Halifax Share Dealing pay cash interest on cash hold in SIPP accounts only. The rate is relatively competitive at 3.6% as of April 2024.

Advanced Features

Halifax Share dealing  prioritizes simplicity and user-friendliness, with a focus on traditional investment products. As such, it does not offer advanced trading features like Futures, Options, Derivatives, and Margin Loans, catering more to investors looking for straightforward investment options. Below a summary of the available investment types:

Features

Investment TypeAvailability
ETFs
Stocks
Bonds
Funds
Options
Derivative
Futures
CFDs
Forex
Crypto
Commodities

IV. Taxes

Tax Wrappers

Halifax Share Dealing offers the most common tax-advantaged accounts available in the UK. This includes:

  • ISA
  • SIPP 

Tax Reporting

Halifax Share Dealing provides tax reports, however the reporting functionality to the tax authority is not automated and is responsibility of the individual investor. 

Thank you for reading.
Good Luck and Keep’em* Rolling!

(* Wheels & Dividends)

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