Hargreaves Lansdown (HL) will offer cash ISAs via its Active Savings platform, providing a one stop shop for those who want the best rate while also taking advantage of the tax wrapper. The investment firm claims to be the first to launch cash ISA options via a savings platform.
While its Active Savings service already offers this for cash savings accounts, cash ISAs are new to the platform.
It will let savers bag competitive rates with just one online account ahead of the new ISA rules kicking in on 6 April, which lets savers subscribe to multiple ISAs within the £20,000 tax free allowance.
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Cash ISAs have been shunned by savers due to their poor rates when compared to the pool of savings accounts on the market, but high interest rates set by the Bank of England have pushed up the rates on ISA deals, which currently vary between the 4% and 5% mark.
Higher interest rates could mean millions of people are set to pay tax on savings interest, but cash ISAs mean you can stash away up to £20k and protect that and the return your money makes from the taxman.
Mark Hicks, head of active savings at Hargreaves Lansdown, said: “HL Active Savings is the only cash savings platform where you can spread your allowance across different types of ISA.
“This flexibility allows savers the freedom to ‘bucket’ their ISA savings – use easy access for some of your cash in the face of the cost-of-living crisis and also have the ability to lock away the rest with a market leading rate.”
Find out how the HL savings platform works and if it is any good.
What is Hargreaves Lansdown Active Savings platform?
Active Savings is essentially a ‘pick and mix’ for savers which lets you take advantage of competitive rates within one account- removing the hassle of constantly switching.
Since it launched back in 2018, the platform has offered savers top rates on traditional easy-access and fixed savings accounts, with 16 products listing.
With more than 175,000 people already using the savings platform, the addition of Cash ISAs will encourage more people to make use of their tax-free allowance in the new tax year.
Even though HL has said it will offer market-leading rates, the rates are not based on whole of market. This means the cash ISA products offered on the platform are with HL’s partner banks and it might not be the best deal on the market.
The investment platform clarified it does sometimes work with providers in the open market, but they can also offer rates that are not available in the open market and specifically for their clients.
HL told MoneyWeek that its savings platform currently offers six cash ISA products which is quite a small range. But since it's the first platform to offer Cash ISAs, we can expect its offering to build.
How do the cash ISAs work on the savings platform?
Active Savings is open to new and existing HL customers, and the platform is free to use via its online account.
When the new ISA rules kick in on 6 April, you will be able to split your £20,000 allowance across multiple ISA products. HL offers three types of cash ISAs on its platform- easy-access ISAs, fixed ISAs and limited-access ISAs.
Currently, you can only open one ISA per tax year.
After you’ve opened your Active Savings account online, you can add money to what will act as a ‘holding account’. You can make a deposit with a debit card or you can transfer from your HL Fund and Share Account.
Once you see some money in your account, you have the option to ‘shop around’ and move your cash between the savings products listed on the site.
Plus, you will have access to different savings rates, and you can move your money to a higher-paying saver when you like.
All the providers listed will have their own minimum deposit. Once you choose which ISA you want to save in, your deposit will be taken from the money have already put into your Active Savings account.
The good news is that any interest you earn from the platform is all take-home money- HL does not charge a fee to its customers on interest earned. Instead, it charges the banks and building societies it partners with to be listed on its platform.
Up to £85,000 of your funds are protected by the Financial Services Compensation Scheme (FSCS).
The platform is convenient for savers, but how do its rates compare to the rest of the market?
How do cash ISAs on the savings platform compare to rates on the market?
Right now, you can earn just over 5% on a cash ISA- the best rates we’ve seen in 15 years.
Here are the top rates HL is offering on its platform, compared to the best rates on the open market.
| Type of ISA | HL Active Savings AER | Rest of the market AER |
|---|---|---|
| Easy-access ISA | Oaknorth - 4.63% | Zopa - 5.08% |
| One year fixed ISA | Coventry Building Society - 4.55% | Virgin Money - 5.25% |
| Limited access ISA | Coventry Building Society - 4.95% | Moneybox - 5.09% |
The rates offered on HL’s savings platform are considerably lower than the rest of the market, going down to 4.55% with its top one-year fixed ISA by Coventry Building Society.
Whereas on the open market, the top rates give you more than 5% on all three types of ISAs. It’s worth knowing though, that easy-access ISAs are variable, so the rate could change at any time depending on market movement.
Savings platforms like the HL one are ideal for savers who prefer convenience over bagging the best rates.
But, HL only offers three types of ISAs on its platform- and there are lots of other ways you can spread your ISA allowance in the new tax year without having to constantly switch accounts.
For example, if you are saving for your child’s future, there’s the junior ISA, and if you’re looking for higher returns over the long term, a stocks and shares ISA might be your calling.
Read more on how to make the most of your £20,000 tax-free ISA allowance.
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