What to consider when consolidating your ISA

Investors are being urged to consider consolidating their stocks and shares ISAs onto one investment platform, but there are risks to be aware of.

With the end of the tax year approaching, investors have just weeks to make use of their ISA allowance and there are also plenty of cashback incentives around to transfer your tax-free savings from previous years.

Research by interactive investor found a third of investors currently have more than three different providers holding their ISA or pensions and almost half have two.

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The platform claims investors with a £75,000 portfolio split between three providers, could save £844 over a five-year period by consolidating into a single account with interactive investor, which charges a flat fee rather than a percentage of the portfolio's value.

This assumes investment growth of 5% per annum and a £25,000 investment with three providers: Hargreaves Lansdown, AJ Bell, and interactive investor.

There are other factors to consider though such as trading fees, the product range on offer and functionality such as apps and research tools as well as customer service.

Other investment platforms may even work out cheaper, depending how much you invest and how regularly you are trading shares or funds.

For example, interactive investor’s cheapest plan starts at £5.99 per month or £71.88 a year.

But Scottish Widows Share Dealing, formerly IWeb, which is owned by Lloyds Banking Group, doesn’t charge any annual or ongoing fees. Trades cost £5 each.

Aside from fees, there are other factors to consider if you plan to consolidate your ISA.

Why consolidate your ISA?

Consolidating your ISA can mean paying one fee, which ideally should work out cheaper

It also give you a more complete view of your finances.

Brian Byrnes, director of personal finance at Moneybox, said: “The biggest win for consolidation is simplicity. With a single provider, you don’t have to juggle multiple accounts, passwords, and apps.

“On top of this, a single view allows you to see your progress instantly. It’s simpler to know exactly how much you have saved for your house deposit, your emergency fund, or your retirement when it’s all on one dashboard. This visibility helps you stay motivated and make faster, more informed financial decisions.”

Consolidating your ISA gives you more control and helps avoid duplicate holdings.

Plus it can help set a clearer strategy.

Ben Faulkner, of EQ Investors, said: “Bringing a portfolio together helps you check you’re properly diversified and haven’t invested more in some areas than you’d intended.

“You may want to invest in companies that are environmentally and ethically aware and look after their employees, but are you confident all your investments follow this approach?

“Consolidating your ISAs can help to ensure your aligning investments with your personal values.

Another benefit is estate planning for inheritance tax.

Rachael Griffin, tax and personal finance expert at Quilter, said: “With the government confirming that pensions will fall within the scope of inheritance tax from April 2027, consolidating financial accounts is likely to become more important for many families.

“This change means more estates will be pulled into inheritance tax and a single, well‑organised ISA structure will make life far easier for executors working through IHT reporting requirements.”

What to watch out for when consolidating an ISA

There may be downsides to consolidating though, particularly if there are exit fees.

Griffin says cost savings are possible, although not guaranteed.

She said: “Some platforms favour larger portfolios with flat fees, while others suit smaller balances with percentage charges. Consolidation only pays if the chosen platform’s structure is genuinely cheaper once everything is under one roof.

“The potential downsides are mostly practical. Exit fees, loss of preferential fund classes and the risk of being out of the market during a transfer all need weighing up. Not all assets can transfer in specie, and specialist holdings may not be fully portable.

Nouran Moustafa, practice principal at Roxton Wealth, says people need to watch carefully for exit fees, transfer costs, loss of access to certain funds or tax wrappers, and the risk of ending up less diversified than they were before.

She said: “The key is to consolidate with purpose, not just for convenience, and to make sure the new home is genuinely better, not just tidier.”