The low-cost broker has launched a Stocks and Shares ISA. The ISA will allow UK taxpayers to invest in a wide range of ISA eligible securities within the tax-free shelter.
Under current legalisation, individuals can invest up to £20,000 per annum and any income or capital gains generated within an ISA are free of tax.
There are several interesting features in the Interactive Brokers Stocks and Shares ISA to be aware of.
Firstly there is no minimum deposit required to open an ISA account, secondly Interactive Broker’s low rates of commission will apply to ISA trading.
ISA investors will be able to access, analyse and trade in stocks from around the globe using Interactive Brokers existing infrastructure and tools.
Interactive Brokers is also introducing fractional share trading in large-cap US stocks, to stocks and shares ISAs, for the first time.
Investors will now be able to gain exposure to the likes of Amazon, Apple, or Tesla with investments of just $100 and upwards.
The fractional shares are deemed to be ISA eligible because they are held by Interactive Brokers (and their ISA clients) in the form of “physical stock” and not derivative products.
Interactive Brokers will also make Advisor Linking available to ISA holders, who can use the company’s investor marketplace to find an advisor to manage an ISA on their behalf.
Interactive Brokers’ new ISA will need to compete with a host of similar products offered by established providers so who looks the best bet?
Following Interactive Brokers’ recent rationalisation of their UK and European commission rates it’s hard to imagine that they can be beaten on trading costs, but what about other fees and charges?
Well, Interactive Brokers will charge an activity fee of £3.00 per month, per Stocks and Shares ISA. However, if you generate £3.00 of commission in that month no fee is payable and if you generate a commission of less than £3.00 in a month then the difference between that sum and £3.00 is payable.
For comparison, Interactive Investors charges a £9.99 per month ISA account fee and Hargreaves Lansdown charges 0.45% of the value of the ISA, up to a maximum of £45.00 per annum. Whereas at a wealth manager Moneyfarm you can expect to pay an ISA fee of 0.75% of the value of the ISA every month.
Interactive Brokers will allow one free withdrawal per ISA, per month and will charge a £7.00 withdrawal fee thereafter. Whereas none of the other providers in the Good Money Guides Stock and Shares ISA comparison tables charges exit fees for cash withdrawals.
You can use our guide to compare the best stocks and shares ISA accounts here.