Fee-free ISAs change the cost landscape for DIY investors

New research from Boring Money shows that the average cost for stocks and shares ISAs has continued to fall across 2024 and into 2025, driven largely by the growth in providers not charging any platform or custody fee.

• The average administration cost for a holding a portfolio of £20,000 in a stocks and shares ISA has fallen from 0.30% to 0.28% in the last 3 years.

• Over the same timeframe, costs for holding a £100,000 portfolio in an ISA have fallen from 0.21% to 0.20%.

New entrants in the market and multiple price revisions from established providers in 2024 means that there are now many ISAs in the UK charging no platform or custody fee. This means that the same providers are now the cheapest whether investors hold £100 or £100,000 in an ISA. Providers who had operated on fixed fee models and led the market on price for larger accounts are now losing their competitive edge and former USP.

The impact of these new entrants and reductions from the incumbents have led to slowly falling costs for investors.

Holly Mackay, CEO of Boring Money comments,
“When awarding our annual Best Buys for cost, we used to consider low-cost ISAs for those with portfolios of less than £50,000 and also for those with higher amounts to invest. However, in the last few years we have seen more and more ISA providers which do not charge any custody or platform fee, or even some who do not charge for UK share dealing. This means that – for the first time ever – we had the same names in the lowest-cost categories for both smaller and larger accounts making the distinction by portfolio size something no longer relevant.”

The 2025 lowest cost ISAs across all portfolio sizes are announced as InvestEngine, iWeb, Lightyear, Trading212 and XTB – none of whom charge an ISA platform fee or any account opening fee.

However the same picture is not true for private pensions where costs have edged marginally higher. The introduction of minimum costs and fixed fee costs by some SIPP providers, and the fact that many of the fee-free challengers have yet to launch a SIPP, means that the average administration cost for a DIY private pension has risen to 0.49% on a smaller portfolio size of £20,000.