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Picking a platform for your Stocks and Shares ISA is not an easy decision. Wade too deeply into the world of price comparison and you can find yourself in a complicated tangle of calculations as you try to work out the cheapest option.
It is also a very personal decision - you need to pick the platform which offers the cheapest fees and best service for your own requirements - which makes recommendations, reviews and price comparison pretty tricky.
But making the right choice is very important as fees can eat away at your returns.
In the first half of this article, we’ll help you understand how to compare platforms, so you can make the right decision for yourself.
We’ll then go onto a more specific comparison of the platforms and brokers in the UK which offer ISAs. We’ll lay out the fees, discuss the positives and negatives and aim to indicate which type of investor might benefit from each platform.
First up, a brief reminder of the ISA basics. An ISA is a tax-free savings account which means that money saved in an ISA account isn’t charged any income, capital gains, or dividend tax.
All eligible ISA participants receive a £20,000 annual allowance which renews at the end of each tax year on 5 April. You can’t roll your ISA allowance over into a new tax year. Use it, or lose it. For now, there is no upper limit for how much you can save in an ISA. The only restriction is your £20,000 annual allowance.
Our full ISA guide provides more detail about the tax wrapper, including the different types of ISA account available to British savers. This article will focus on the Stocks and Shares ISA.
To set up a Stocks and Shares ISA your first step is to choose a share dealing investment platform or full service broker. These providers have come a long way in the last few decades. Gone are the days when investors had to call up exclusive brokers to buy or sell their shares in transactions which might take several days to process. Today, most brokers offer online services which allow for almost instantaneous transactions. This democratisation of investment has paved the way for a newer breed of investment service known as a share-dealing investment platform. These providers offer simpler services, but often cheaper fees. We’ll be providing examples of both full-service brokers and share-dealing platforms in this article.
Whether you are a new investor thinking about setting up an ISA account for the first time, or an experienced investor looking to switch providers in search of a better deal, there are many fees to be aware of.
Frustratingly, there is no one language of fees. What some providers might call an annual charge will be called a custody charge by someone else, while one provider’s transaction fee is another’s share dealing fee. Some providers offer a fixed fee for looking after your money, others charge a percentage. And then there are those which offer tiered pricing which makes comparison with other providers nigh on impossible.
The following is a comprehensive list of the fees that you will have to stomach in some form as you put your money to work in an ISA:
Custody fees are the amount the provider charges for holding your money in their account, whether it is invested in shares or funds. These fees can either be charged as a percentage of your total holding, or a fixed subscription charged monthly or annually.
If you have a large portfolio be wary of percentage fees as these can mount quickly with the size of your portfolio (even though a lot of providers offer tiered charges which reduce for big portfolios).
Trading fees are the amount you will have to pay to buy (and sometimes to sell) your individual investments. Most providers offer a cost per trade and some offer discounts if you make a certain number of trades in the preceding month. Other providers allow a certain number of free trades included in the ongoing custody fee - these might be appealing for regular traders.
Trading fees normally apply only to shares, unit trusts and ETFs, although some providers also charge for the buying and selling of open-ended funds. Fund fees themselves are a separate category.
Most providers charge different amounts for buying shares in foreign countries. If you are planning on buying a lot of non-UK shares make sure you check that these are available through your platform and ensure that the trading fees aren’t too high.
Fund fees are charged by the owner of the fund, not the platform or broker which is looking after your ISA. If you plan to invest in funds, it is important to keep a lid on fees - some providers charge a lot for uninspiring performance.
Some platforms and brokers have relationships with fund managers and are able to offer discounts on certain funds. These platforms sometimes refer to their custody charges as fund fees, but be aware that you will still have to pay the fee to the actual fund manager on top of that.
If you plan to invest mainly in funds, you should select a broker which helps make this as cheap as possible. If you plan to invest mainly in direct equity or listed collective vehicles (e.g. ETFs and Investment Trusts), specialist fund platforms are probably not your best option. If you have started your investment journey investing in funds and now plan to pick shares yourself, you might be best off transferring your ISA to a new provider.
Some ISA providers charge a percentage fee to transfer your ISA from or to another provider. Check these fees before transferring.
It is also important to note that time might be the biggest transfer cost. Some ISA providers take a long time to transfer your funds to a new platform or broker.
Platform and broker service is just as important as fees, but even harder to compare. Every investor should make their own decision based on what the provider offers and whether it matches their investment needs.
Before you pick your platform, make sure you look at the service the provider offers to ensure it matches your investment goals.
For example, if you plan to invest in international markets, make sure the markets you are after are available at a reasonable price. Or if you want to automatically reinvest your dividends, make sure that the service is provided. You might want to engage in short selling, or use stop losses and limit orders - not all platforms provide these services so double check before you commit.
For less experienced investors, there are many providers which now offer smart portfolios - accounts which help point you in the right direction of certain funds and take some of the difficult decision-making out of the equation. And do you want hints and tips from experts? Some providers have invested heavily in their financial education and can offer a better service for less experienced investors.
For some investors, the availability of a Flexible ISA might be very important. Flexible ISAs allow savers to withdraw any amount of money from their ISA and redeposit it in the same tax year without it eating into their allowance. While most big banks offer flexible accounts on their cash ISAs, very few investment platforms and brokers do. So if you want a flexible ISA for your stocks and shares account, you’ll have to choose your broker carefully - in the table below we have indicated which providers offer Flexible ISA accounts.
The following table lists the basic fees of the top platforms and brokers offering ISA accounts. The table compares the fees for an investor with a £250k portfolio who buys 3 shares a month - the costs might be different for portfolios of different sizes.
For a comprehensive overview of all the fees from each account, you can view the full spreadsheet here.
Broker | Custody Fee | Share Trading Fee (incl ETFs and Investment Trusts) | Fund Trading Fee | Interest paid on cash held in your ISA | Flexible ISA |
Shares: 0.25% (capped at £3.50 per month) Funds: 0.25% | £9.95 | £1.50 | 1% | No | |
Shares: 0.1% Funds: 0.4% | £6 | £3 | None | Yes | |
0.40% | UK: £4.95 US: Free | Free | 3.10% | Yes | |
Shares: 0.35% (capped at £240 per year) Funds: 0.35% | £11.50 | Free | 1.50% | Yes | |
0.35% | £7.50 | Discounts offered on selected fund fees | None | No | |
£4.99 per month | Free | NA | 1% | No | |
£3 per month | £9.50 | £9.50 | None | No | |
Shares: 0.45% (capped at £45 per year) Funds: 0.45% | £11.95 | Discounts offered on selected fund fees | 1% | No | |
£0 | US: £0 UK: £3 | NA | None | Yes | |
0% | UK and Europe: £3 per trade US: Tiered from $0.0035 per share | NA | None | No | |
£9.99 per month | 1 trade free per month, £7.99 | 1 trade free per month, £7.99 after that | 1.25% | No | |
Source: Stockopedia, company websites |
In the sections below, we have provided a little more detail on the strengths and weaknesses of some of the most popular platforms for a Stocks and Shares ISA.
If you invest mainly in shares and trade infrequently, AJ Bell’s You Invest platform offers very competitive rates. The annual custody fee for shares is capped at £42. The price is also not particularly prohibitive if you choose to add funds to your portfolio - the custody fee starts at 0.25% for portfolios up to £250,000 and falls to nothing for portfolios over £500,000.
It is in the trading fees where the charges can start to mount. The standard rate is £9.95 per trade and you only qualify for a discount if you buy more than 10 shares in the previous month. AJ Bell’s app includes a handy calculator, which will work out the cost of each trade (including FX charges) for you.
Indeed, AJ Bell You Invest app is very intuitive. Pricing data is comprehensive and you can use limit orders and stop losses. While live pricing is available, customers have commented that transactions sometimes complete at a slightly different price to that originally stated.
AJ Bell has recently launched an app-based investment platform called Dodl in an attempt to satisfy the burgeoning audience of young investors who want to trade shares frequently, but not many markets are available for now.
Charles Stanley is a full service broker which offers a direct investing service for investors who want to manage their own money. The ongoing custody charges for holding money in an ISA don’t compare to the investment platforms. For shares, the custody fee is capped at £240 per year. Trading fees at £11.50 are also very steep.
But Charles Stanley offers a flexible ISA, which can be very beneficial for some investors.
There is no denying that Freetrade is a fantastic platform. The app is beautifully built and the fees are incredibly competitive - for the standard account you currently pay just under £60 a year on a monthly basis (although this is set to fall in May with the introduction of an annual subscription). Trading costs are free.
Although Freetrade is still far from being a profitable company, it has managed to raise a great deal of money in recent years and continues to invest heavily in its service - thus managing to address many of the previous complaints.
The company has added a lot of new markets and while you probably don’t get the same breadth of investment opportunities as other platforms, most of the main markets are covered. Stop losses and limit orders were made available at the end of 2022, allowing investors to add disciplined rules to their portfolio management. Since August 2021, the company has offered real time prices, but doesn’t show the bid/ask spread. Freetrade’s own discussion forum does have examples of customers who regularly see their transaction complete over the listed price.
The UK’s biggest broker for private investors has claimed its crown for a reason - if you are buying funds (especially the funds which Hargreaves has a relationship with), the fees can be generous.
The custody fee for holding shares is also not too expensive, capped at £45 per year. But it is the trading fees for buying individual shares where the costs can really bite. Shares dealing fees are £11.95 and you have to make more than 10 trades in the previous month to qualify for a discount.
IG rates are most competitive for international investing. If you trade more than three times in the previous month, dealing costs on US shares are free. The foreign exchange fees are also very generous. The custody fee for investors who don’t trade at least three times in a quarter is £96 a year, charged quarterly - not the cheapest on the market, but also not especially prohibitive.
IG is definitely a trader’s platform - the trading and charting tools are very popular with customers and the platform offers live prices. Investors can’t use IG to buy open-ended funds.
Popular US share dealing platform Interactive Brokers recently launched an ISA account. Investors should be aware that they can’t hold foreign currencies in their ISA and will need to pay the foreign exchange fee with each transaction, but these are pretty competitive at Interactive Brokers. In fact, all the fees are competitive at Interactive Brokers. There is no custody charge and the transaction fees for UK and European shares is just £3.
The platform and the way it charges for US share dealing (per share, rather than per transaction) perhaps suits slightly more experienced investors. But the platform generally gets very good reviews.
Interactive Investor (II) launched a flat fee subscription service a few years ago to become a more competitive option for investors with large portfolios. Unfortunately, the arrival of fee caps from many large providers means II no longer looks especially attractive. The basic ISA account costs just under £120 per year and trades are £7.99 on top of that (you get one free trade per month). The FX charges are also one of the more expensive options.
But II gets good reviews from its customers and if you use it for regular trading, transactions are free.
About Megan Boxall
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How can you set a buy limit for a price is higher than the current price?
My understanding is it will fill immediately as the price is below the limit price.
You can set prices below the current price. They don't always fill, either, I've had to cancel orders and then buy the shares.
Yes you can. Though it’s rare on mainstream UK platforms.
It’s called a buy stop limit order. You enter the stop price which acts as the threshold you have to meet to trigger the order. Then it becomes a buy limit at the maximum price specified.
Interactive Brokers and DeGiro offer them.
I assure you it isn’t possible on HL - perhaps via phone order but haven’t tried that. I placed one a few years ago and it got filled immediately as Rusty described. Small position size via spread bet is what I use instead to compensate for the lack of this function via HL online system.
There's nothing worse than that awfull sinking feeling when you've just bought a share and it immediely drops by couple of percent. So I usually set a buy limit a couple of percent or so below the current price (depending on the volatility of that particular share) unless of course there's a divi due, then leave the limit order on line for 30 days. You just have to be patient, sooner or later it'l drop and complete. I've only once ever regretted it when a share has rocketed upwards before the order completed. It's a risk!
Breakout trading, Stan Weinstein strategy would be one example. Mark Minervini is another. It is not just breakouts but momentum trading as well.
It is not about paying more than the current price, it is buying when the price goes above a certain price, such as the 150 Moving Average, or a buy trigger point.
Just need bit of advice; has anyone used Clear capital Markets? They charge 1% on any trade buy or sell, with no management fee. They recommend shares to buy but leave the final decision to you. Any thoughts? Thanks
It was a real one. i met the broker yesterday. Warning bells rang when he said he did not believe in any stop loss.
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