Investment ISA Charges Compared
Frequently asked questions
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Investment ISAs allow you to invest in shares, bonds, and funds in a tax-efficient way.
Frequently Asked Questions
What is an investment ISA?
An investment ISA – also known as a Stocks & Shares ISA – is a tax-efficient investment account.
You do not pay income tax on dividends or capital gains tax when your investments go up in value if they are in an Investment ISA, but you are limited in how much you can add to your ISA account each tax year.
Am I eligible for an investment ISA?
You need to meet the following criteria to be eligible for an Investment ISA:
- aged 18 or over
- a UK resident for tax purposes
What is the current ISA allowance?
For the current 2021/22 tax year, the maximum you can save in an ISA is £20,000.
You can split your allowance between difference types of ISA account - for example if you put £10,000 into a cash ISA that would leave you £10,000 of your annual allowance remaining.
Does my ISA allowance roll over?
No, your annual allowance does not carry into a new tax year if you do not use it.
If you do not use your current £20,000 allowance before the start of a new tax year next April, you will receive a new annual allowance and won’t be able to invest with the unused allowance from the current tax year.
Any historic investments which stay within your Investment ISA will continue to earn tax free dividends and you won’t pay capital gains tax on if they go up in value.
How many investment ISAs can I have?
You can only pay into one Investment ISA per tax year, but you can open a new account with a different provider each year if you want to (and potentially transfer your current ISA balance across to your new provider, though this may incur exit fees).
You can use a different Investment ISA provider to your Cash ISA provider if you have one.
Are Investment ISAs safe?
The Financial Services Compensation Scheme (‘FSCS’) is an independent body set up by the Government under the Financial Services and Markets Act 2000 and funded collectively by regulated participants in the financial services industry. It can pay you compensation if a firm is in default and cannot meet any valid claims against it.
Investment ISA providers that are authorised and regulated by the FCA are covered by the scheme up to £85,000 per person per provider. All the providers listed on this page are covered by the FSCS at the time of writing.
The FSCS might apply if you lose money because your Investment ISA provider had not been administered correctly, or because of misrepresentation or fraud, and the provider concerned has gone out of business and cannot return your investments or any cash held on your behalf.
All the providers listed on this page are covered by the FSCS at the time of writing
Please note investment losses due to fluctuations in market valuations are not covered by the FSCS.
If you would like to know more, please visit the FSCS website.
Can my Investment ISA be transferred into a cash ISA?
Yes, but only if the receiving company accepts ISA transfers. There may also be exit charges associated with your investment ISA so check those before deciding.
Do Investment ISAs pay dividends?
Shares and funds held in an Investment ISA can benefit from dividends if the company or companies (in a fund) chooses to pay them.
Dividends paid from shares or funds in an ISA are received tax free and will not impact your dividend allowance.
Remember that funds are often available as either Accumulation (often denoted as ‘Acc’ in the fund name) or Income (often denoted as ‘Inc’ in the fund name). Accumulation funds automatically reinvest dividends tax-free to increase the size of the fund, and Income funds pay the dividend directly into your ISA account as cash, again tax-free.
Can you transfer an Investment ISA to another provider?
All ISA providers allow transfers out (though this may incur charges), but not all providers accept transfers in, so check before making any decisions.
If you would like to switch your ISA to a new provider while keeping the tax benefits you have accrued intact, you will need to arrange for a transfer rather than selling and re-investing (where you would only receive your current annual allowance).
If you transfer an Investment ISA that you have paid into during the current tax year to a different provider, you must transfer the whole balance. However, for ISAs from previous years, you can choose how much to transfer.
There are two ways that you can transfer your Investment ISA from one provider to another – either through a cash transfer or an ‘in specie’ transfer. An ’in specie’ transfer will keep your current investment mix, as opposed to selling and transferring a cash balance in a cash transfer and then reinvesting.
What other types of ISA platform are there available?
In addition to the do-it-yourself platforms list on this page - where you pick and choose what to invest in, without any direction from the platform provider – there are other options available tailored to different investor types.
With this type of platform, you provide information to identify your investing goals and then the platform picks investments to reach the goals you have agreed. Typically, the investments will be based on the following:
- How much you have available to invest.
- How much risk you’re willing or able to accept.
- What your investing goals are.
- Any investing constraints you have (such as all investments required to be environmentally friendly).
The overall charges are typically higher with a Do-it-for-me platform when compared to the do-it-yourself platforms to compensate the platform provider for the additional steps involved.
What charges are there?
The investing platform you choose will have likely have different a range of costs. If you invest in funds, they will also have ongoing charges.
When deciding between platforms, the main charges to evaluate are:
- Platform charge. This is the cost for holding investments on the platforms and is often either a flat fee, which best for big investors, or as a percentage of the value of your investments (so the more your investments grow, the larger the fee). Percentage-based charges are usually stepped like income taxes, decreasing as the total balance grows. Platform charges are often higher for holding traditional mutual funds and capped for exchange traded instruments such as ETFs and shares.
- Selling/buying funds and shares. This is the cost incurred everything you buy or sell investments and is often dependant on the investment type. Active traders looking to make multiple adjustments to their portfolio each month will want to shop around to minimise these charges, as they can really add up. Regular monthly investments often come with a discounted charge rate.
- Transfer-out fee. The cost to move your Investment ISA allowance from one platform to another.
Is a good return guaranteed?
No, you could lose money in an investment ISA due to the volatile nature of the stock and bond markets.
For reference, the biggest one-day fall of the FTSE 100 was 12.2% on October 20th 1987 (the day after Black Friday).
How long should I invest for?
Investing is for the long-term. If you decide to start a stocks and shares ISA, it is a good idea to invest for at least five years.
The stock market can be volatile during temporary periods of economic stress, and you don’t want to be forced to sell when the market is at a low because you need the cash.
Can I withdraw money from an Investment ISA?
If you want to withdraw money from your ISA, you can do this at any time. If you are selling investments first, thwill need to settle (and any charges paid) before you can withdraw cash.
Remember that if you take money out of your Investment ISA, you will lose that portion of your ISA allowance.
What is the best UK Investment ISA for me?
When you are looking for the best Investment ISA, your experience and knowledge of the stock market should be a factor. If you are a beginner, you may be better off with a do-it-for-me type account, where investments are recommended to you rather than having to pick them yourself.
If you are a comfortable managing your own investments in a do-it-yourself Investment ISA (like the ones found on this page) double check any prospective provider has the following:
- The range of investments you are interested in.
- The support channels you need to assist you with any queries (e.g. phone, online)
- If you want to track your investments on your mobile device, make sure they have a mobile app.
- If you want to receive investment research, be sure to check they offer what you need (often you can register for an account to start receiving general research without paying anything).
- Authorised and Regulated by the FCA.
- Some ISA providers offer paid advice, if you require this be sure to check beforehand.
What can I invest in?
You can buy and hold lots of different types of investment in an Investment ISA, such as:
- Traditional funds (unit trusts, OEICs (Open Ended Investment Companies))
- Investment trusts
- Exchange-traded funds (ETFs)
- Individual shares
- Government and corporate bonds
Remember charges to buy and hold different types of investment may vary, so shop around to make sure you are getting the best deal.
What should I invest in?
Choosing what to invest in will depend on your personal circumstances.
Try our asset mixes calculator to learn about asset allocation, which is an investment strategy that aims to balance risk and reward by shifting your assets (between high-risk investments such as shares and lower risk investments) according to your goals, risk tolerance, and investment horizon.
When should I invest in an Investment ISA?
A good rule of thumb to have at least three months’ essential outgoings available in an instant access cash account before you start thinking about investing.
Also, you should pay off any short-term debt before you look to invest, such as credit cards, personal loans, or car loans. You can think of paying off debt as a risk-free investment – if you are paying off a credit card that is charging 17% interest, you are getting a guaranteed 17% return paying off that debt, which is likely a better return than any investment you will ever make!