AJ Bell's 0.25% Fee Cap Sounds Cheap — Until You Calculate What It Actually Costs

AJ Bell charges 0.25% per year on funds held in a SIPP, Stocks & Shares ISA, or Lifetime ISA. Straightforward enough. But there's a cap that changes everything: the platform fee on shares, ETFs, and investment trusts is capped at £3.50 per month (£42 per year) per account.

This cap matters enormously for larger portfolios. Hold £200,000 in funds and you pay £500 per year in platform fees. Hold £200,000 in ETFs and you pay just £42. That's a £458 difference — same portfolio size, same platform, same account type.

For investors who prefer ETFs and investment trusts — and the shift away from active funds accelerates every year — AJ Bell becomes one of the cheapest platforms available once your portfolio exceeds about £40,000. The FCA's platform market study noted that switching between fund types can produce dramatically different fee outcomes on the same platform. AJ Bell is a textbook example.

AJ Bell's dealing charges are tiered. Online share deals cost £5.00 each for the first 10 trades in a month, dropping to £3.50 for trades 11 onwards. Fund deals cost £1.50 each. Regular monthly investing — automatic purchases via Direct Debit — costs £1.50 per deal regardless of what you buy.

That regular investing rate is the cheapest way to invest on the platform, and it's what AJ Bell clearly wants you to use. Set up a £500/month standing order into a global tracker ETF and your dealing cost is £18/year. Hard to argue with.

But occasional traders face a different picture. An investor making 2 share trades per month pays £120 per year in dealing charges alone. Add that to the platform fee on a £50,000 fund portfolio (£125) and you're at £245 per year — which is £101 more than Interactive Investor's flat £11.99/month (£143.88/year) including their free monthly regular investment.

Compare this to Hargreaves Lansdown, which charges £11.95 per share deal for infrequent traders. AJ Bell's £5.00 is clearly cheaper per trade, but HL offers free regular investing with no dealing charge at all. If you exclusively use monthly Direct Debits, HL's dealing cost is zero — though the higher 0.35% platform fee more than offsets that saving.

The takeaway: use regular investing to buy. Only place ad-hoc trades when you genuinely need to. Every unnecessary trade is £5.00 you didn't need to spend. For a deeper look at how all the major platforms compare, see our investing hub.

For context, the average UK investor makes 4-6 trades per year according to industry data. At £5.00 per trade, that's £20-£30 annually — a minor cost. The problem arises for investors who tinker: checking their portfolio daily, reacting to headlines, buying and selling individual stocks. Ten trades per month costs £600/year in dealing charges alone — more than the entire platform fee on a £200,000 fund portfolio.

AJ Bell charges the same 0.25% platform fee on both SIPPs and Stocks & Shares ISAs. The share/ETF cap of £3.50/month also applies to both. So why does the SIPP cost more in practice?

Two reasons. First, SIPPs hold larger balances. The pension annual allowance of £60,000 means pots accumulate faster than ISAs capped at £20,000/year, and the platform fee on funds scales with balance. A £300,000 SIPP in funds costs £750/year in platform fees.

Second, SIPP drawdown adds complexity. When you start taking income in retirement, AJ Bell charges £1.50 per drawdown payment. That's cheap compared to HL or Fidelity, but it's another recurring cost. And the tax implications of drawdown — 25% tax-free, remainder taxed as income — mean getting the timing right matters more than the platform fee.

For the ISA, the maths is simpler. The £20,000 annual ISA allowance limits how quickly balances grow. A £50,000 Stocks & Shares ISA holding ETFs costs £42/year. A £100,000 ISA in ETFs? Still £42. That's hard to beat. For a full breakdown of ISA types and how to use your allowance, see our ISA guide.

One angle worth considering: if you hold both a SIPP and an ISA on AJ Bell, each account has its own £3.50/month ETF cap. So a combined £200,000 portfolio split across both accounts — £120,000 SIPP and £80,000 ISA, both in ETFs — costs just £84/year in total platform fees. That's extraordinarily cheap for a regulated, FCA-authorised platform managing six figures of your retirement and tax-free savings.

Every investment platform earns interest on your uninvested cash. The question is how much they pass on.

With the Bank of England base rate at 3.75%, the spread between what platforms earn and what they pay you is real money. AJ Bell pays tiered interest on cash balances, but the rates sit below the base rate. On a SIPP with £5,000 sitting in cash — common after dividend season or while waiting to reinvest — the difference between earning 3.75% and earning 2.5% is £62.50 per year.

This cost never appears in fee comparison tables. It disproportionately affects cautious investors who hold significant cash allocations within their SIPP or ISA. If you're one of them, consider a money market fund instead — you'll earn closer to the base rate, and the platform fee still applies, but the interest drag largely disappears.

This isn't unique to AJ Bell. HL, Interactive Investor, and Fidelity all retain a spread on cash balances. But on a platform that markets itself as low-cost, it's the charge most likely to blindside you. For more on making your cash work harder, see our savings guide.

According to MoneyHelper, keeping large cash balances within an investment wrapper rarely makes sense when dedicated Cash ISA rates from specialist providers exceed 4%. If you need cash exposure within your SIPP or ISA, a money market fund like the Royal London Short Term Money Market Fund or L&G Cash Trust tracks closer to the base rate than any platform's uninvested cash rate.

AJ Bell is the right platform if you tick three boxes: you prefer ETFs or investment trusts over funds, you trade infrequently (ideally via regular investing), and your portfolio sits between £30,000 and £250,000.

Below £30,000, the percentage-based fee is so small that dealing charges matter more — and platforms like Trading 212 offer commission-free dealing. Above £250,000, flat-fee platforms like Interactive Investor become dramatically cheaper because their monthly charge doesn't scale with balance.

For fund-heavy investors, AJ Bell's 0.25% is competitive but not exceptional. Vanguard charges 0.15% capped at £375/year — though you're restricted to Vanguard's own fund range.

The worst-case scenario on AJ Bell: a large SIPP (£500,000+) invested entirely in funds, with regular share dealing and significant uninvested cash. That investor could pay north of £1,500 per year. The same portfolio on Interactive Investor costs about £240.

The best-case scenario: a £150,000 ISA in ETFs, using regular investing, minimal cash held. Total annual cost: £60. That's genuinely excellent value for a Which? Recommended Provider with a full investment range.

For tax-efficient investing strategies that minimise your platform costs, see our tax planning hub and our pensions guide.

This article is for informational purposes only and does not constitute financial advice. You should seek independent financial advice before making any investment decisions.