|
Charges
Most cash ISAs do not have any charges,
as these are usually hidden within the interest margin.
However, most stocks and shares components will have
two basic charging components:
Initial charges
For collective investments such as unit trusts or OEICs,
this will usually be the standard initial charge on
the fund, typically 5-6% with no extra costs for the
ISA management. However, a growing number of investment
groups discount their standard initial investment charge
down to 2% or 3%, with some waiving them altogether.
In such instances, you should be wary of early encashment
penalties that can run for as long as the first five
years of the ISAs life.
Investment trusts that levy an initial charge have
to add VAT as well, though charges investment trust
ISAs are often lower than with other collective investments,
with a flat fee of £30 - £50 not uncommon.
For direct investment ISAS, the initial charge varies
widely. Some brokers make no initial charge, other charge
a flat fee while some still charge a relatively high
percentage of the initial sum invested.
Annual charges
Unit trusts and OEIC annual charges are normally around
1-1.5%, with most having the facility to increase annual
charges at 90 days' notice.
Investment trusts carry their own internal management
charges, which vary according to the age and the size
of the trust. For large general trusts, the annual management
costs may be less than 0.5%. However, most investment
trust ISAs levy an additional charge. Generally this
will be around 0.5% (+VAT) but again, some ISAs carry
flat fee annual charges, which favour larger investors.
Many non-collective investment ISAs are operated on
a 1% (+VAT) annual fee. This is halved for some company
sponsored single share ISAs. To discourage small investments,
a minimum cash fee is frequently applied. Some self-select
ISAs charge no annual fee, but collect charges in other
ways.
Other charges
Alongside the two main charges, you may come across
the following:
- Early encashment penalties - Charged if you encash
or transfer your investment within the penalty period,
often taking the form of a sliding scale relating
to the length of time the investment has been in place.
- Termination fees - Some providers levy a fee whenever
an ISA is encashed or transferred.
- Commission - The purchase of investment trusts or
shares will normally involve the payment of commission.
- Dividend collection fee - Some self-select ISAs
charge a VAT-free fee on each dividend payment in
place of an annual charge, typically between £4
and £7. Report charges - Share based ISAs will
often levy a fee of around £50 for investors
who wish to receive additional shareholder information
or attend shareholder meetings.
|
Best
Buys
