OUR BOTTOM LINE
Interactive Investor has become one of the leaders in online share dealing in the UK, and you might say the reason is simple. Interactive Investor offers comparably low fees on a full-featured, easy-to-use share dealing platform. That means that investors can save money, while not feeling like they’re sacrificing on the usability of their brokerage account. And you don’t lose any of that when it comes to Interactive Investor’s Stocks & Shares ISA.
Stocks & Shares ISA Overview
If you’re already familiar with the Interactive Investor platform and services, you may be happy to know that not much changes between the standard share-dealing platform and the tax-advantaged ISA. If you’re new to Interactive Investor, I encourage you to read our review of Interactive Investor’s share dealing service to get a close look at what the broker brings to the table.
Among the things that don’t change with the Stocks & Shares ISA is the new fee structure at Interactive Investor. In what the company refers to as its ‘Netflix-like’ model, customers can choose one of three plans:
- Investor plan: £9.99/month platform fee with a £7.99 trading credit each month. Trading fees are £7.99 for UK shares, ETFs, funds, investment trusts, and US shares. Non-US international shares are £19.99 per trade.
- Funds Fan plan: £13.99/month platform fee with a £7.99 trading credit each month. Fund trades are £3.99 each. UK share, ETF, and US share trades are £7.99 each, while non-US international shares are £19.99 per trade.
- Super Investor: £19.99/month platform fee also with a £7.99 trading credit each month. UK share, ETF, and fund trades are £3.99 per trade. US share trades are £4.99 and non-US international trades are £9.99 each.
With that in mind, the question we should ask is: What’s different about the Interactive Investor Stocks & Shares ISA?
Investing is better when it’s tax free
The more money you keep, the better. And the more money you keep in an investing account, the more opportunity that money has to compound over the long term. And that’s the beauty of stocks and shares ISAs.
As of this writing, the annual limit for ISA contributions was £20,000, and with a Stocks & Shares ISA from Interactive Investor, you can invest that £20,000 in a wide variety of shares and funds and allow it to grow tax free. That means that capital gains on your well-chosen shares… tax free. And dividends on those high-yielding shares… tax free as well!
Of course, it’s important to remember that taxes can get tricky and not everyone’s tax situation is the same. So the potential for you to be able to fully take advantage of a stocks and shares ISA may depend on your personal tax situation. If you have questions about this, it could be good to talk to your tax professional.
The bottom line, though, is that the main difference between a standard share dealing account from Interactive Investor and the Stocks & Shares ISA is the ability to let your investments grow tax free.
What about the fees?
Often what you’ll see with ISAs and other types of accounts is that additional fees get layered in on top of the standard platform charges and dealing fees. With Interactive Investor’s Stocks & Shares ISA, there’s good news, and also more good news.
The first bit of good news is that there aren’t additional fees to worry about. This means that if you’re already familiar with Interactive Investor’s new fee structure, there’s nothing additional that you have to figure out with the Stocks & Shares ISA.
Specifically, this means that you’re still paying the same dealing fees based on your subscription choice. And transacting in international shares is the same as well.
The other bit of good news is that you may actually have lower fees with a Stocks & Shares ISA. Under Interactive Investors new pricing structure, you pay a monthly platform fee. That doesn’t change. But, if you have an Interactive Investor share dealing account and you open a Stocks & Shares ISA, you won’t have to pay an additional monthly fee for the second account (note that both accounts must be under the same name for this to work out).
This works in reverse too. If you open a Stocks & Shares ISA today and then open a share dealing account afterward, you’ll only pay the one monthly fee across both accounts. And you can use the trading credits across both accounts as well.
You might think of that as a sort of customer loyalty reward programme by Interactive Investor.
Is the Stocks & Shares ISA right for you?
Well, you know I can’t answer that for you! As mentioned above, the tax implications of an ISA can vary from one person to the next. And the fit of a particular online broker can also vary from person to person.
There are a few things I can tell you though. Shares (and funds) have historically been a great way for people to grow their wealth. And when you combine that with a programme like ISAs that allows fund and share investments to grow tax fee, really good things can happen. No, it’s not magic, it’s just the way that compounding returns work.
And as far as the Stocks & Shares ISA from Interactive Investor, if what you’re looking for is a relatively full-featured, easy-to-use platform with a transparent — and, if you ask me, fair — fee structure, then this account could be a good match for you. And if you’re already an Interactive Investor customer, or could see yourself opening an additional account at Interactive Investor, then the fact that you only pay one platform fee across your accounts is a very nice feature.
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