Nutmeg ISA at a glance
With plenty of choices for UK residents to save and invest tax-efficiently, it can be hard to find the right platform to use. So, we’ve created this Nutmeg investment ISA review to give you an insight into what this particular provider can offer for your investments.
The Nutmeg ISA presents a robust way to save and invest for yourself, for your child, or to buy a new home/save for retirement.
Looking at the competition, Nutmeg’s investment ISA offering stands out because of:
- Well-established robo-advisor platform.
- The ability to use a stocks and shares ISA, Lifetime ISA (LISA), or a Junior ISA (JISA).
- A straightforward app that’s easy to use.
Want to know more about the Nutmeg ISAs? To ensure you completely understand this account, throughout this Nutmeg investment ISA review, we’ll explain everything you need to know. This will include all the fees involved, the types of ISA accounts available, how it compares against competitors, and the steps you need to take to transfer your ISA.
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, but keep in mind that the allowance can change yearly.
The main benefit of using a stocks and shares ISA is that for most investments held within the tax wrapper, you don’t have to pay dividend or capital gains (CGT) tax on any income or growth. This allows your portfolio to grow and compound over the years without being held back by a tax burden.
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 down the line.
Stocks and shares Lifetime ISA (LISA)
An investment Lifetime ISA (LISA) works slightly differently. You can only use £4,000 of your allowance towards this type of account. The main benefit is that you’ll get an automatic boost of 25%, so you can automatically earn a £1,000 bonus each year (plus any investment gains).
However, a LISA can only be used for retirement savings or to buy your first house. Any other reason and the UK government will penalise you by 25%, which would actually leave you worse off than when you began.
Any money also has to remain in the account for at least 12 months before you can use it. Keep in mind that if your chosen investments drop in value, you could end up with less than what you put in.
Nutmeg ISA at a glance
|🗺️ Supported Countries||UK|
|💰Platform Fee||0.45% – 0.75% for first £100k (0.25% – 0.35% after)|
|🎮 Demo Account||No|
|📈 Portfolio Rebalancing||Yes|
|💵 Minimum deposit||£500 (£100 for JISA & LISA)|
|📍Investment Instruments||ETFs; Ready-made portfolios|
What type of ISA does Nutmeg offer?
There are three types of ISA accounts available with Nutmeg:
- 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. This is a robo-advisor, so you’ll select a particular type of portfolio strategy to use, and the minimum investment is £500.
- Stocks and shares LISA account: allows you to invest up to £4,000 each tax year. You’ll get all the same investment choices as with the regular S&S ISA. The fees are also the same as the regular S&S ISA, but with the LISA you also get the 25% government bonus, and the minimum investment is £100.
- Stocks and shares 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 towards your annual allowance. The child can only access the account once they turn 18. The minimum investment is £100 and it comes with the same choices and fees as the other ISA accounts.
How the sign-up works
The sign-up process is relatively straightforward. If you head to the Nutmeg homepage on your phone or desktop and hit ‘sign up’ you can create your account. You’ll then need to download the Nutmeg app and choose which type of ISA account you want to open. During the registration process, it’s best to have:
- Your national insurance (NI) number.
- Current address.
- A debit card or bank details.
It doesn’t cost you anything to open up a Nutmeg account, but there are deposit minimums of £100/£500 (depending on the ISA you want). When setting up your profile and opening your account, you’ll get to choose how you want to invest.
Nutmeg investment ISA portfolio options
The investing strategy of Nutmeg is to use multiple ETFs (exchange-traded funds) to build its various portfolios. This is to keep the costs down and give you plenty of diversification. The choice of ready-made portfolios are as follows:
- 10 Fully Managed portfolios – ranked by risk, each ready-made portfolio will be invested in a diverse selection of assets, industries, and sectors. These portfolios will be actively managed and adjusted as necessary.
- 10 Socially Responsible managed portfolios – another option is to choose from 10 socially responsible portfolios that work in a similar way. They come with the same platform fee but the fund charges tend to be higher.
- 5 Fixed Allocation portfolios – with these options, you select a level of fixed allocation and this will be automatically balanced and reviewed yearly by the Nutmeg investment team. There’s less management of these portfolios, so the platform fees are lower (0.45% instead of 0.75%)
- 5 Smart Alpha portfolios – these are the latest addition and are powered by J.P. Morgan Asset Management. They come with the same platform fee and are quite similar to the Fully Managed options except that any adjustments are a collaboration between Nutmeg and J.P. Morgan.
Nutmeg ISA fees
The costs and fees for the Nutmeg ISA are very competitive and straightforward to grasp because they apply to all the ISA account types. Here’s a table with everything laid out so that you can review the costs and fees yourself:
|Nutmeg ISA Fee||Cost|
|Investment annual platform fee (charged monthly)||0.75% for first £100k, 0.35% after (for Fully Managed, Socially Responsible, or Smart Alpha)|
|Investment annual platform fee (charged monthly)||0.45% for first £100k, 0.25% after (for Fixed Allocation)|
|Average Annual Fund charges||
0.21% – Fully Managed
|Average Annual Market Spread (Cost of Buying and Selling Within Portfolios)||0.07%|
|FX (foreign exchange) fee||None|
How the fees for Nutmeg work
Although the rates are all annual, the fees are charged on a monthly basis and automatically deducted from your Nutmeg account. The fees will be calculated on a daily basis at close of business and assigned to your account, accruing over the month.
Nutmeg is transparent about the costs and you’ll be able to see everything clearly in your account on the app.
Pros and cons of the Nutmeg ISA
Here’s a quick summary of the main advantages and disadvantages of the Nutmeg ISA accounts:
- Investment portfolio managed by experts for a competitive fee.
- Cheaper fees once your portfolio hits £100,000.
- Minimum deposit of just £100 for LISA/JISA.
- Robust app that’s been active for years.
- Backed by J.P. Morgan Chase.
- Lots of ready-made portfolios to choose from, including socially responsible options.
- Free withdrawals for all ISA accounts.
- A simple option for passive investors who want expert management.
- You’re only able to invest in fixed portfolio options and can’t customise them.
- No ability to buy individual stocks and shares.
- The platform fees aren’t the cheapest.
- Minimum deposit of £500 for stocks and shares ISA is higher than some competitors.
- You cannot transfer a LISA to Nutmeg.
How it compares with other ISA and robo-advisor providers
Throughout this Nutmeg investment ISA review, we’ve run you through most of the key benefits and downsides, but let’s take a look at how the Nutmeg platform and its fees stack up against alternative ISA providers:
|Fees||Nutmeg||Moneybox||Vanguard (Managed)||Hargreaves Lansdown (Ready-Made)||InvestEngine (Managed)||Natwest||Wealthify||AJ Bell (Ready-Made)|
|Minimum investment||£500 (£100 for LISA & JISA)||£1||£500 or £100/month||£100 or £25/month||£100||£50||£1||£1,000|
|Platform fees||0.75% up to £100k; 0.35% after (lower for fixed allocation portfolio)||£1/month (plus 0.45%/month)||0.45%/year||0.45%/year||0.25%||0.15%||0.6%||0.25%/year (max £3.50/month)|
|Share dealing fees||0.21% – 0.3% average fund charge (plus 0.07% average market spread)||£0 (ongoing fund charges of 0.12% – 0.58% depending on choice and 0% for US stocks)||£0||£0 for funds (ongoing fund charges of 0.92% – 0.99%)||£0||0.07% maximum (plus maximum ongoing charge of 0.4%)||0.16% for original plans (0.7% for ethical)||£1.50 to buy or sell funds (plus ongoing fund charges of 0.6% – 0.8%)|
|Foreign exchange fees (FX)||None||0.45%||None||1% (reducing to 0.75%/0.5%/0.25% for large trades)||None||None||None||0.75% (reducing to 0.5% and 0.25% for large trades)|
How to transfer an ISA to Nutmeg
It is possible to transfer your existing ISA over to Nutmeg, you’re also able to transfer from a different type of ISA (e.g. cash to stocks and shares). However, Nutmeg only offers stocks and shares ISA transfers at the moment, so you can’t transfer a LISA.
You’ll first need to create a Nutmeg account, download the app, and then complete your profile. Once you’ve done that, you’ll have the option to provide Nutmeg with your current ISA details.
Nutmeg will then begin the ISA transfer process at your instruction. It should take between 15 and 30 days for the transfer to complete.
Unfortunately, an ‘in-specie’ transfer of your existing investments isn’t possible, so everything will be liquidated to cash during the transfer and then moved over to your new Nutmeg ISA.
Always make sure that you use the official Nutmeg 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 the Nutmeg ISA safe?
Yes! Nutmeg is one of the most well-established robo-advisor apps on the market and the company has been active since 2011. The business was also recently acquired by J.P. Morgan, one of the biggest financial services firms in the world.
On top of this, Nutmeg 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.
How to pick the right ISA
Finding the right ISA for you depends on what you’re looking for and how regularly you save and invest. Here are some things to look out for and questions to ask yourself when you’re trying to find the best ISA:
- Does the platform offer commission-free trading in the UK, and how cheap are the platform and share dealing fees?
- Can you access multiple accounts, such as a LISA or JISA?
- Is there a discount for frequent investors or savers?
- What is the investment choice like?
- How easy is it to use the platform, is there a mobile app?
- Is there a healthy selection of ready-made or managed portfolios?
- Is there a cheap FX fee if you plan on buying international shares?
- How reputable is the provider?
- Does the platform offer good customer service?
- 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. Many platforms structure costs and fees differently, especially if you opt for a managed portfolio. 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 type of each ISA account 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 down the line.
Who is Nutmeg owned by?
Nutmeg was bought by J.P. Morgan Chase in 2021 and is now a subsidiary of the financial services firm.
What is the interest rate on a Nutmeg ISA?
Nutmeg only offers investment ISAs. So there’s no fixed rate of interest like you might get with a cash ISA. Instead, your rate of return will depend on the portfolio you choose and how well it performs.
Can you move abroad with a Nutmeg ISA?
This is possible, but you won’t be able to make any more contributions if you’re no longer a UK tax resident. If you’re planning to move abroad, you can let Nutmeg know and they will update your ISA account for you.
How much do you need to invest in Nutmeg?
There’s a minimum investment of £500 for the stocks and shares ISA, and a minimum of £100 for the stocks and shares LISA (Lifetime ISA)/Junior ISA (JISA).