Index funds are a popular way to invest in the stock market without picking individual stocks or paying high fees to active fund managers.
But how do you choose the best online broker in the UK for index funds? The main things to compare are the range of funds, the account fee, the cost of each trade and how easy the platform is to use.
We compared the offers of the main UK investment platforms and picked three of the best brokers in the UK for index funds:
- Interactive Brokers: best for the widest fund range and low costs
- Interactive Investor: best for a simple flat fee
- Hargreaves Lansdown: best for customer service
Below we look at the fees, pros and cons of each one to help you decide which suits you.
Best UK brokers for index funds compared
| Broker | Account fee | Fund trade | ETF trade |
| Interactive Brokers | £0 (£3 minimum monthly activity in the ISA) | £0 to £4.95 | £3 (fixed) or 0.05%, min. £1 (tiered) |
| Interactive Investor | £5.99 a month (Core plan, up to £100,000) | £3.99 | £3.99 |
| Hargreaves Lansdown | 0.35% a year (shares and ETFs capped at £150) | £1.95 | £6.95 |
Online trades in UK funds and UK-listed ETFs. Regular monthly investing is free at Interactive Investor and Hargreaves Lansdown. Sources: Interactive Brokers, Interactive Investor and Hargreaves Lansdown, October 2026.
How much would you pay each year?
Which broker is cheapest depends on how much you invest. The table below shows the yearly broker fees for an index fund portfolio in a Stocks and Shares ISA, with one purchase a month.
| Broker | £20,000 | £50,000 |
| Interactive Brokers | £36 | £36 |
| Interactive Investor | £71.88 | £71.88 |
| Hargreaves Lansdown | £70 | £175 |
Interactive Brokers: one ETF purchase a month at £3 (fixed pricing), which also covers the £3 minimum monthly activity fee. Interactive Investor: Core plan at £5.99 a month with free regular investing. Hargreaves Lansdown: 0.35% account charge on funds with free regular investing. Fund management charges not included.
A flat fee gets cheaper as your portfolio grows, while a percentage fee keeps rising. At £50,000, the Hargreaves Lansdown account charge on funds is already more than twice the Interactive Investor fee. If you hold ETFs instead of funds at Hargreaves Lansdown, the charge stops at £150 a year.
Interactive Brokers: best for the widest fund range and low costs
Interactive Brokers in a nutshell
Interactive Brokers (IBKR) is a global online broker that gives UK investors access to more than 150 exchanges worldwide. You can buy stocks, ETFs, bonds and funds in a general account, a Stocks and Shares ISA or a SIPP. Its fund marketplace lists more than 50,000 mutual funds from over 500 fund families worldwide, although the funds you can buy depend on where you live.
IBKR also offers a large range of ETFs. ETFs and index funds are not exactly the same, but both track an index at a low cost. What is the main difference? ETFs can be bought or sold at any time during the trading day, while index funds are priced once a day, like other mutual funds. For a long-term investor, both should give very similar results.
For UK-listed ETFs, IBKR has two pricing plans:
- Fixed: £3 per trade up to £6,000, then 0.05% of the trade value.
- Tiered: 0.05% of the trade value, with a minimum of £1 per order, plus exchange and clearing fees.
Thousands of mutual funds have no transaction fee, and most others cost £4.95 per trade in the UK. IBKR charges no custody fees. In the Stocks and Shares ISA there is a minimum monthly activity fee of £3, so a single £3 trade a month covers it.
You can choose between several platforms, from the simple IBKR GlobalTrader and IBKR Mobile apps to the Client Portal and Trader Workstation (TWS) for advanced users.
| Pros | Cons |
| Largest fund range of the three | Longer account opening process |
| Low trading fees and no custody fees | Complex fee structure and reports |
| Access to markets and currencies worldwide | Steep learning curve for beginners |
Interactive Investor: best for a simple flat fee
Interactive Investor (ii) is a UK investment platform that charges a flat monthly fee instead of a percentage of your portfolio. Every plan includes a Stocks and Shares ISA, a SIPP and a Trading Account for one fee.
ii has three plans:
- Core: £5.99 a month for portfolios up to £100,000. Funds, UK and US shares and ETFs cost £3.99 per trade.
- Plus: £14.99 a month with no portfolio limit. Funds cost £1.49 per trade and you get one free trade a month.
- Premium: £39.99 a month. Fund trades are free, ETFs cost £2.99 and you get 10 free trades a month.
Regular investing is free on every plan, from £25 a month. For an index fund investor who buys the same funds each month, this means the monthly fee is often the only cost charged by the platform.
Interactive Investor also offers an easy-to-use website and mobile app, with research, news and investment guides for new investors.
| Pros | Cons |
| Flat monthly fee that covers ISA, SIPP and Trading Account | Monthly fee is high for small portfolios |
| Free regular investing on all plans | 0.75% FX fee on the Core plan |
| Easy-to-use website and mobile app | Advanced platform (ii360) costs £20 a month extra outside Premium |
Hargreaves Lansdown: best for customer service
Hargreaves Lansdown in a nutshell
Hargreaves Lansdown (HL) is one of the largest investment platforms in the UK, with over 2 million clients. It offers a Stocks and Shares ISA, a SIPP, a Lifetime ISA, a Junior ISA and a Fund and Share Account, with thousands of funds, shares and ETFs.
HL is known for its UK-based helpdesk, which you can reach by phone or secure message. It also publishes a lot of free research, such as the Wealth Shortlist of selected funds and its own range of ready-made portfolios.
HL changed its fees on 1 March 2026:
- Account charge: 0.35% a year on funds in an ISA or SIPP (on the first £250,000, with lower rates above that). For shares and ETFs, the charge is capped at £150 a year per account.
- Dealing charges: £1.95 per fund trade and £6.95 per share or ETF trade (£3.95 if you placed 20 or more trades the month before).
- Regular investing: free for both funds and shares when you invest by monthly Direct Debit.
The percentage fee makes HL more expensive than IBKR and ii for larger fund portfolios. If you invest monthly by Direct Debit, you avoid the dealing charges.
| Pros | Cons |
| UK-based customer support | Percentage-based account charge for funds |
| Free research, fund shortlists and ready-made portfolios | £6.95 per one-off share or ETF trade |
| Free regular investing by Direct Debit | Limited access to global markets |
Why should you invest in index funds?
Index funds aim to replicate the performance of a market index, such as the FTSE 100 or the S&P 500, by investing in the securities of that index (just like ETFs).
Key features of index funds:
- Passive investing: the fund manager does not pick stocks and simply tracks the index. This keeps costs low compared to actively managed funds.
- Diversification: index funds hold many securities, which gives you exposure to a broad part of the market and reduces the risk of any single company.
- Low costs: without research teams picking stocks, management fees are lower than in active funds, often below 0.5% a year.
- Low turnover: index funds change their holdings less often, which keeps trading costs inside the fund low.
Pick index funds that match your goals, time horizon and risk tolerance. Broad market funds, such as a global or FTSE All-Share tracker, can be the core of a portfolio. Sector or regional funds target a specific part of the market.
The most popular UK index funds track the FTSE 100, FTSE 250 and FTSE All-Share indices. For UK government bonds (gilts), many funds track the FTSE Actuaries UK Conventional Gilts All Stocks index.
Summing up
The best online broker for index funds in the UK depends on how much you invest and how you like to invest.
Interactive Brokers has the widest range and the lowest costs: about £36 a year in an ISA if you buy one ETF a month. However, the platform is complex, and the ISA has a £3 minimum monthly activity fee.
Interactive Investor suits investors who want one flat fee of £5.99 a month for an ISA, a SIPP and a Trading Account, with free regular investing. The fee weighs more on small portfolios.
Hargreaves Lansdown is the choice if you value customer support and research. Its 0.35% account charge on funds costs £70 a year on £20,000 and £175 on £50,000.
When investing, your capital is at risk and you may get back less than you invest.
FAQ
What is the best UK index fund?
There is no single best fund, because it depends on your goals. Popular FTSE 100 trackers include the iShares Core FTSE 100 UCITS ETF, the Vanguard FTSE 100 UCITS ETF and the HSBC FTSE 100 UCITS ETF. They track the 100 largest companies listed on the London Stock Exchange.
Where can I buy index funds in the UK?
You can buy index funds through an investment platform or broker, such as Interactive Brokers, Interactive Investor or Hargreaves Lansdown. Most of them let you hold the funds in a Stocks and Shares ISA, a SIPP or a general account.
Can I invest in an S&P 500 index fund from the UK?
Yes. You can buy a UK-available ETF or index fund that tracks the S&P 500, such as the Vanguard S&P 500 UCITS ETF or the iShares Core S&P 500 UCITS ETF.
How do I invest in a UK index?
The easiest way is a fund or ETF that tracks the FTSE 100, FTSE 250 or FTSE All-Share. Open an account with a broker, deposit money and buy the fund. Setting up a monthly regular investment is often the cheapest option.
How much tax do you pay on index funds in the UK?
In a Stocks and Shares ISA you pay no tax on gains or dividends. In a SIPP your investments grow free of tax, but pension withdrawals are taxed as income, apart from the tax-free part. Outside these accounts, gains above the £3,000 yearly allowance are subject to Capital Gains Tax. Dividends above the £500 allowance are taxed at 10.75%, 35.75% or 39.35% in the 2026/27 tax year, depending on your income tax band. Tax treatment depends on your circumstances and may change. Sources: GOV.UK Capital Gains Tax and GOV.UK Tax on dividends.
Is it better to invest in index funds or ETFs?
Both give low-cost and diversified exposure to the market. ETFs trade throughout the day, while index funds are priced once a day. The cost of buying them can differ by broker: at Hargreaves Lansdown, for example, a fund trade costs £1.95 and an ETF trade £6.95. For long-term investing, both are good options.