Interactive Investor ISA Review: Fees, Options, Transfers, and How It Compares

What is an ISA?

An ISA (individual savings account), is a tax-efficient account for saving or investing. There are a number of types of tax-efficient ISA accounts available to adult UK residents. 

The main types of ISA accounts are:

• Cash ISA (£20,000 limit)
• Stocks and shares ISA (£20,000 limit)
• Lifetime ISA (£4,000 limit)
• Innovative Finance ISA (£20,000 limit)
• Junior ISA (£9,000 limit)

Each tax year, you get a £20,000 allowance that can be used for saving and investing with your ISA account. If you like, you can use this whole amount for your stocks and shares ISA, or split it across multiple types of ISAs. But keep in mind that the allowances can change yearly. 

The main benefit of using an ISA is that you don’t have to pay dividend or capital gains (CGT) tax on any income or growth for most investments held within the tax wrapper. This allows your portfolio to grow and compound over the years without being held back by a tax burden. 

If you use a cash ISA, you don’t have to pay any tax on interest earned. Again, this has the same benefit of allowing your savings to grow without a tax burden slowing things down. It also removes the need for you to have to report any interest received on a tax return.

Another significant benefit is that when you want to withdraw funds from your ISA, unlike with a pension, any money you take out doesn’t count towards your income for that year – meaning you pay no additional tax on your funds in future.

Interactive Investor ISA at a glance

Types of Interactive Investor (ii) ISA accounts

There are two types of ISA accounts available with Interactive Investor:

1. Stocks and shares ISA account: this is for adults over 18 based in the UK and you can invest up to £20,000 into this type of ISA during the tax year. You can use this to become a DIY investor or choose from the ready-made model portfolios available.
2. Junior ISA (JISA) account: allows you to invest on behalf of someone under 18. You can invest up to £9,000 each tax year, which doesn’t count toward your annual allowance. You can only access a JISA with the ‘Investor’ or ‘Super Investor’ plans.

How the Interactive Investor platform works

The sign-up process is relatively straightforward. If you head to the Interactive Investor homepage, select ‘services’ then ‘accounts’ at the top of the page and then navigate to the particular type of ISA account you want – just follow the on-screen instructions to get set up.

The Interactive Investor platform works slightly differently to some other ISA providers. There are three subscription plans, ranging in price and features. Here’s a breakdown of the different plans available:

• Investor Essentials (£4.99 per month) – includes a trading account and a stocks and shares ISA. You can only hold up to £50,000 across both accounts. The plan also includes free regular investing (minimum £25/month). UK/US shares and funds cost £3.99 per trade, and other international shares cost £9.99 per trade. You can add up to 5 friends and family for an extra £5 per month.
• Investor (£11.99 per month) – with this subscription, you get a trading account, stock and shares ISA, plus a Junior ISA. There’s no cap on how much you can hold across your accounts. You also get free regular investing plus credit for a free trade each month. After that, trades are also £3.99 for US/UK shares and £9.99 for other international stocks. You can add up to 2 friends and family for no additional charge.
• Super Investor (£19.99 per month) – for Interactive Investor’s top subscription plan, you get all the benefits of the ‘Investor’ plan, with some additional services. First, you can invite up to 5 people to join the ‘Essentials’ plan for free. You also get two free trade credits each month, and reduced trading fees after that – £3.99 for UK/US shares and £5.99 for other international investments.

ii Model portfolios

Besides the vast range of DIY investing options, ii also offers five model portfolios. These ready-made portfolios are created in partnership with Morningstar, include a mixture of managed or tracker funds, and are reviewed by in-house experts. Here’s what the current selection looks like:

• ii Active Growth
• ii Low Cost Growth
• ii Sustainable Growth
• ii Active Income
• ii Low Cost Income

Signing up for an account with ii

You can open up a stocks and shares ISA in about 10 minutes. There’s no minimum deposit requirement, but remember holding an account will cost at least £4.99 per month and you need to contribute £25 per month if you want to make the most of the free regular investing service. 

During the registration process, it’s best to have: 

• Your national insurance (NI) number.
• Current address.
• A debit card or bank details.

So, you can open up an investment ISA account quite easily. Just keep in mind that you can only open and pay into one type of each ISA account every tax year.

Interactive Investor ISA fees

The costs and fees for Interactive Investor aren’t the cheapest, and whether it’s good value will depend on how you like to invest. Here’s a table with everything laid out so that you can review the costs and fees yourself:

How the fees for Interactive Investor work

Here’s a bit more detail on the fees:

• How fees are paid – your monthly subscription will be taken via direct debit. Without a direct debit, your cash balance will be used, and if you have no cash – then holdings may be sold to cover fees. You’ll pay for trades as you go (first using any available free trade credits with your plan). If you set up a regular investment, you can avoid trade fees.
• Platform fees – these are a flat monthly fee, no matter the size of your portfolio, but based on the subscription model you choose. This can be helpful and better value if you happen to have a large portfolio. Just remember the cheapest ‘Essentials’ plan has a portfolio cap of £50,000.
• Share dealing fees – these will depend on your subscription plan as there are reduced trading fees (as described above) with some plans and also free trading credits
• FX fee – the foreign exchange fee also works on a tiered system and is based on the size of your international trade. The larger the trade, the lower your total FX fee will be.

Pros and cons of the Interactive Investor stocks and shares ISA

Here’s a quick summary of the main advantages and disadvantages of the ii ISAs available:

Transfer your ISA to ii

Transferring your existing cash or stocks and shares ISA over to Interactive Investor is possible. 

The fastest way to carry out a stocks and shares transfer is online, here are the steps to follow using the free online service:

1. Open your stocks and shares ISA account with ii.
2. Request a transfer during the ISA account opening process or later through your customer portal.
3. Interactive Investor will take over and request the transfer from your existing provider.
4. The transfer should take between 4 to 6 weeks to complete. 

If you are moving investments also available with ii, an ‘in-specie’ transfer is possible. Any stocks or shares that aren’t supported will be liquidated into cash during the transfer and moved over as funds for you to spend on new investments.

Always make sure that you use the official Interactive Investor ISA transfer service. Don’t withdraw everything from your current provider and move it yourself because you could lose the tax protection you’ve built up over time.

Is your money safe with Interactive Investor?

Yes. Interactive Investor is regulated by the FCA (Financial Conduct Authority), and is covered by the Financial Services Compensation Scheme (FSCS), which protects up to £85,000 of your deposits. 

On top of this, ii is a well-established company that’s been in business for over 25 years. Interactive Investor is also responsible for over £50bn of assets held by its 400,000+ clients.

How to pick the right stocks and shares ISA

Finding the right ISA for you depends on what you’re looking for and how regularly you invest. Here are some things to look out for and questions to ask yourself when you’re trying to find the best stocks and shares ISA:

1. Does the platform offer commission-free trading in the UK, and how cheap are the platform and share dealing fees?
2. Is there a discount for frequent investors?
3. What is the investment choice like?
4. Can you access multiple accounts, such as a LISA or JISA?
5. How easy is it to use the platform, is there a mobile app?
6. Do you have to pick all the investments, or are there ready-made portfolios?
7. Is there a cheap FX fee for buying international shares?
8. How reputable is the provider?
9. Does the platform offer good customer service?
10. Are there any incentives like free stocks or cashback for joining?

The truth is, there’s no single ‘best’ ISA provider. It’s all about finding the one that fits your needs as an investor. Many platforms structure costs and fees differently. So some will work out cheaper for you depending on what you invest in and how frequently.

As mentioned, you can open and pay into one stocks and shares ISA each tax year. So, if you try one out for a while and don’t like it or find it expensive for your needs, you can always transfer to another platform later.

The bottom line – is the Interactive Investor (ii) ISA any good?

There are many positives with the Interactive Investor stocks and shares ISA, but it won’t be the platform for everyone.

To sum it up, the ii ISA offering stands out because of:

• Free regular investing.
• No minimum deposit.
• Flat platform subscription fees (good value for larger portfolios).
• Massive range of investments to choose from (over 40,000!).
• The option to have a S&S ISA and a JISA.
• You can create a DIY portfolio or use model portfolios.

It’s one of the most well-established brokerages available in the UK. However, you pay a premium in some areas for that quality reputation. For example, the share dealing commission is relatively high compared to other providers. Also, the international share dealing fees are expensive (unless you’re on the premium ‘Super Investor’ subscription plan).

Interactive Investor allows you to invest using its mobile app or web desktop service. Not much can’t be done with an ii ISA account, but all these features can come at a cost. Sometimes you get what you pay for, and whether this is the right platform for you depends how you want to invest.

There is the option to carry out an ISA transfer (and convert from a cash ISA), so if you’re looking to change providers or find a new platform, this will make moving much more effortless. 

Hopefully, this review of the Interactive Investor (ii) stocks and shares ISA has given you some insight into what it can offer you as an investor. Let us know how you get on in the comments and what you think of this account.