Dormant ISA, Active Charges: How Platform Inactivity Fees Are Silently Draining British Investors' Wealth

Leave a £50,000 stocks and shares ISA untouched for five years on the wrong platform and you could lose more than £1,200 to fees alone — before a single investment has underperformed. That is not a projection built on worst-case assumptions. It is the arithmetic of inactivity fees, custody charges, and platform administration levies that several major UK providers apply to accounts showing little or no trading activity. Most investors have no idea these charges exist.

This is not a fringe concern. According to data from the Financial Conduct Authority's Financial Lives survey, approximately 4.1 million UK adults hold a stocks and shares ISA but made no new contributions or trades in the previous 12 months. Many of these investors opened their accounts during periods of active engagement — a buoyant market, a timely bonus, a conversation with an adviser — and then moved on. The account remained open. The fees did not stop.

What Inactivity Fees Actually Look Like

The terminology varies by platform, which is part of the problem. Some providers call it an inactivity fee. Others embed it within a broader custody charge that only activates below a minimum transaction threshold. A handful apply an annual administration levy that is waived for active accounts but reinstated the moment a customer stops trading.

Here is how the landscape breaks down across the most widely used UK investment platforms:

Hargreaves Lansdown charges an annual platform fee of up to 0.45% on the value of funds held, capped at £45 per year for shares. For a £50,000 fund-based ISA, that equates to £225 annually — and it applies regardless of whether the account is active. Over five years, with no growth assumed, that is £1,125 in platform fees before any fund-level charges are counted.

AJ Bell applies a tiered custody charge of 0.25% on funds up to £250,000, with no inactivity-specific penalty but no waiver for dormant accounts either. On £50,000, that is £125 per year, or £625 over five years.

Interactive Investor operates a flat-fee subscription model starting at £4.99 per month for its Investor plan, rising to £11.99 per month for Super Investor. A dormant account on the entry tier costs £59.88 per year — modest on a large balance, but punishing on a small one. A £5,000 ISA left untouched pays a fee equivalent to 1.2% annually.

Freetrade charges £5.99 per month for its standard ISA wrapper, totalling £71.88 per year. Again, there is no activity-based waiver.

Trading 212 currently offers its ISA with no platform fee, which makes it an outlier. However, its revenue model depends on payment for order flow and currency conversion charges — costs that matter more to active traders than to dormant holders, but worth noting nonetheless.

The Five-Year Damage Calculation

To make the comparison concrete, consider a £50,000 stocks and shares ISA left entirely untouched — no new contributions, no trades, no withdrawals — for five years from April 2026. Assume the underlying investments grow at 5% per annum, in line with long-run real equity returns for a balanced global portfolio.

Note: Figures are illustrative estimates based on published platform fee schedules as of Q1 2026. Underlying fund OCFs (typically 0.10%–0.75%) are excluded from this comparison and apply across all platforms.

The spread between the most and least expensive options on a £50,000 dormant ISA approaches £1,125 over five years — money that compounds against you rather than for you.

Why These Charges Rarely Appear Clearly in Statements

Regulation requires platforms to provide a summary of costs and charges annually, but the presentation varies considerably. Platform fees are often listed as a separate line item, but they are rarely contextualised against the account's total return. An investor who sees their ISA grow from £50,000 to £52,000 in a year may not notice — or mentally connect — the £225 deducted elsewhere in the statement.

The FCA's Consumer Duty rules, which came into full force in 2023 and were extended to closed products in 2024, require firms to demonstrate that their charges represent fair value. Yet enforcement has been inconsistent, and the obligation falls on the firm to demonstrate fairness rather than on investors to challenge it.

There is also the matter of fund-level charges layered beneath platform fees. A dormant ISA holding an actively managed fund with an ongoing charges figure (OCF) of 0.75% is paying that cost in addition to the platform levy. On £50,000, that is a combined annual drag of up to 1.2% — £600 per year — before the portfolio has earned a single pound.

How to Audit Your Own Account

The process is straightforward but requires deliberate effort, because platforms are not incentivised to make it easy.

Step 1: Log in to every investment platform where you hold an ISA. If you are unsure how many you have, the HMRC Personal Tax Account shows ISA subscriptions by year and provider.

Step 2: Locate the annual costs and charges statement. Under MiFID II rules (retained in UK law post-Brexit), platforms must provide this. Search for it in your documents or secure message inbox.

Step 3: Identify the platform fee, any inactivity or administration levy, and the OCF of each fund held. Add these together to calculate your total annual cost as a percentage of the account value.

Step 4: If the combined figure exceeds 0.5% on a passive fund portfolio, or 1.0% on an actively managed portfolio, the account warrants a review.

Step 5: Consider consolidation. Moving a dormant ISA to a lower-cost platform via an ISA transfer (not a withdrawal — always use the formal transfer process to preserve the tax-free wrapper) can eliminate hundreds of pounds in annual charges.

The ISA Deadline Factor

With the 2025–2026 tax year closing on 5 April 2026, investors reviewing their accounts now face a dual opportunity: use remaining allowance before the deadline and simultaneously audit whether the platform holding their existing ISA is the right one for a low-activity strategy. The two decisions are independent — you can contribute to one ISA and initiate a transfer of an older ISA simultaneously.

What to Watch in the Next 30 Days

The FCA is expected to publish updated guidance on platform fee transparency in mid-2026 as part of its broader Consumer Duty review. If that guidance introduces mandatory standardised fee summaries — a reform the regulator has signalled interest in — the current opacity around inactivity charges may reduce. For now, the burden remains with the investor.

Closing verdict: A dormant ISA is not a free account — it is a fee-generating asset for your platform, and the only way to stop it working against you is to check the numbers, compare the alternatives, and move the money if the maths demands it.

This article is for informational purposes only and does not constitute financial advice. Your capital is at risk. Past performance is not a reliable indicator of future results.