Royal Mail share buyers face a big bill if they choose to se

[TrueBlueTerrier]

Royal Mail share buyers face a big bill if they choose to sell through the Government's dedicated website

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Buyers of Royal Mail shares who order them direct from the Government are being warned that they face a large bill when they come to sell.

There are two major routes for buying shares in the controversial privatisation – from one of 65 brokers authorised to handle the sale or direct from a Government website.

Buying through the website is convenient, but when it comes to selling by phone you could get stung by a 1 per cent commission charge set at a minimum of £25. The commission charge is also 1 per cent for selling online, but with a minimum of £17.50.

Trouble in the post: Demand for the Royal Mail flotation has exceeded expectations - but investors should be wary of hidden costs when they sell.

Trouble in the post: Demand for the Royal Mail flotation has exceeded expectations - but investors should be wary of hidden costs when they sell.

Either way means that selling £10,000 of shares will cost £100. However, if you initially bought the shares through an authorised online broker, rather than direct, you could sell them for a fixed fee as low as £5.95.

There is no commission when buying shares at launch, however they are bought, but after the initial offer closes at midnight on Tuesday you will be charged for buying shares and you must pay 0.5 per cent stamp duty.

Justin Modray, founder of financial information website Candid Money, says: ‘The Government’s selling charge is daylight robbery. There is no reason why the share trading should cost more than £10. Customers are penalised for not using a broker.’

He says that if you have already applied for shares through the Government it makes sense to later pay £10 to transfer the shares to another broker account to benefit from cheaper trading costs.

The Government website gov.uk/royalmailshares lists all of the 65 broker firms. However, of those only 30 are accepting new clients for the Royal Mail offering. Their charges are listed on the website. Alternatively phone 0330 123 0147.

The downside of using a broker is that they will hold your shares in a ‘nominee account’. This means that you are not sent a share certificate and usually lose the right to vote at annual general meetings.

The Government gives prospective shareholders the option of having their shares held in a nominee account by a firm called Equiniti, which handles share dealing and issues share certificates. You retain shareholder rights and can attend general meetings.

The idea of holding a share certificate will prove costly. When it comes to selling any shares, Equiniti charges 1.5 per cent of their value, at a minimum of £45, for conducting the sale if a certificate has been issued. So if you had £10,000 of shares then the selling cost would rise to £150. If you have lost your certificate there will be a £42 replacement charge.

Richard Hunter, head of equities at broker Hargreaves Lansdown, says if you want to put your shares in a tax-free wrapper you are best off making the initial purchase through a broker.

He says: ‘If you want to use your Isa allowance or put the shares into a self-invested personal pension it makes sense to use a broker at the launch, otherwise you will pay to move them.’

No commission is charged for putting the shares into an Isa or Sipp at launch, however brokers will make an annual charge to hold them. Hargreaves Lansdown, for example, charges 0.5 per cent.

If you buy the shares through a broker and later put them into an Isa or Sipp, the shares are sold and instantly repurchased inside the tax-efficient wrapper, which would incur a £11.95 fee with Hargreaves Lansdown, plus stamp duty.

Anyone buying through the Government website must pay £10 to change nominee accounts to a broker offering these plans.

Shares will not be distributed on a first-come, first-served basis. If you apply now you have just as much chance of getting shares as when the offer opened, although the number could be scaled back.

The minimum investment is £750 and there is no maximum. If you apply online at the Government website you must use a debit card and the maximum spend is £10,000.

You can also download an application form and post it with a cheque. A First Class delivery collected tomorrow should arrive on time on Tuesday – if the Royal Mail does its job properly.

[Sergeant Blast]

So if we plan to buy shares, we are better off keeping them in the nominee acount rather than requesting a share certificate?

[Biker Mouse]

How do we buy the EPO using a broker? Do we need to buy via applyroyalmailshares.service.gov.uk
and then transfer to a broker or can we buy them using a broker?

[RobertT]

How do we buy the EPO using a broker? Do we need to buy via applyroyalmailshares.service.gov.uk
and then transfer to a broker or can we buy them using a broker?

If you want to buy via the EPO you must use the dedicated website: https://employeeroyalmailshares.service ... epage.aspx" onclick="window.open(this.href);return false;

If you want to use a broker you must apply as a normal member of the public, so your application is not guaranteed.

[Biker Mouse]

How do we buy the EPO using a broker? Do we need to buy via applyroyalmailshares.service.gov.uk
and then transfer to a broker or can we buy them using a broker?

If you want to buy via the EPO you must use the dedicated website: https://employeeroyalmailshares.service ... epage.aspx" onclick="window.open(this.href);return false;

If you want to use a broker you must apply as a normal member of the public, so your application is not guaranteed.

What does the gvt nominee a/c charge for selling? Only in it short term

[RobertT]

What does the gvt nominee a/c charge for selling? Only in it short term

I think it's 1% or £17.50 whichever is higher.

[Biker Mouse]

What does the gvt nominee a/c charge for selling? Only in it short term

I think it's 1% or £17.50 whichever is higher.

Cheers, thinking about it and now changed my mind! I've bottled it!