Breakdown
How it works
An ISA is a wrapper, not an investment: returns depend on what you hold. Fees compound against you exactly as growth compounds for you — a 1% fee on 6% growth removes a sixth of the return but about a quarter of the final gain over 20 years. The tax saved is the CGT and dividend tax you would have paid in a general account.
Formula
Worked example
£10,000 start, £500 a month, 6% growth, 0.4% fees, 15 years: about £164,000 value; £100,000 contributed; £6,300 lost to fees; about £14,500 CGT avoided.
Frequently asked questions
What are the ISA rules for 2026/27?
£20,000 total across cash, stocks & shares, innovative finance and Lifetime ISAs (LISA max £4,000). From April 2027 the cash ISA portion is capped at £12,000 for under-65s; the rest must be invested.
Can I keep my ISA if I move abroad?
You keep it and it stays tax-free in the UK, but you cannot add to it while non-resident (except Crown employees). Your new country may tax the growth — the UAE, Qatar and Saudi do not.
Cash ISA or stocks & shares?
Cash for money needed within 5 years; stocks & shares for longer. Over 15+ years equities have beaten cash in almost every historical period.
What fees are reasonable?
Platform 0.15–0.45% (or flat £10–15 a month for large pots) plus fund charges 0.1–0.25% for index trackers. Total under 0.5% is good.