Most cash ISAs do not have any charges, as these are usually hidden within the interest margin. However, most stocks and shares components will have two basic charging components:

Initial charges
For collective investments such as unit trusts or OEICs, this will usually be the standard initial charge on the fund, typically 5-6% with no extra costs for the ISA management. However, a growing number of investment groups discount their standard initial investment charge down to 2% or 3%, with some waiving them altogether. In such instances, you should be wary of early encashment penalties that can run for as long as the first five years of the ISAs life.

Investment trusts that levy an initial charge have to add VAT as well, though charges investment trust ISAs are often lower than with other collective investments, with a flat fee of £30 - £50 not uncommon.

For direct investment ISAS, the initial charge varies widely. Some brokers make no initial charge, other charge a flat fee while some still charge a relatively high percentage of the initial sum invested.

Annual charges
Unit trusts and OEIC annual charges are normally around 1-1.5%, with most having the facility to increase annual charges at 90 days' notice.

Investment trusts carry their own internal management charges, which vary according to the age and the size of the trust. For large general trusts, the annual management costs may be less than 0.5%. However, most investment trust ISAs levy an additional charge. Generally this will be around 0.5% (+VAT) but again, some ISAs carry flat fee annual charges, which favour larger investors.

Many non-collective investment ISAs are operated on a 1% (+VAT) annual fee. This is halved for some company sponsored single share ISAs. To discourage small investments, a minimum cash fee is frequently applied. Some self-select ISAs charge no annual fee, but collect charges in other ways.

Other charges
Alongside the two main charges, you may come across the following:

• Early encashment penalties - Charged if you encash or transfer your investment within the penalty period, often taking the form of a sliding scale relating to the length of time the investment has been in place.
• Termination fees - Some providers levy a fee whenever an ISA is encashed or transferred.
• Commission - The purchase of investment trusts or shares will normally involve the payment of commission.
• Dividend collection fee - Some self-select ISAs charge a VAT-free fee on each dividend payment in place of an annual charge, typically between £4 and £7. Report charges - Share based ISAs will often levy a fee of around £50 for investors who wish to receive additional shareholder information or attend shareholder meetings.