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Hargreaves Landsdown ISA Review 2020

Here is everything you need to know about Hargreaves Lansdown ISA accounts, especially their features and benefits an an d
Kane Pepi
Author: Kane Pepi

Last Updated: March 17, 2020

Hargreaves Lansdown bank logo

If you’re currently on the lookout for an ISA, you might be thinking along the lines of Barclays, Nationwide, or Halifax. In other words, the vast majority of ISA providers in the UK typically come in the form of a bank or building society. The overarching reason for this is that such financial institutions are usually protected under the FSCS, meaning that your funds are 100% safe.

However, it is also worth considering what non-conventional institutions such as Hargreaves Lansdown have to offer. The hallmark online brokerage firm now offers three individual ISAs for you to consider.

If that sounds like something you would like to explore further, be sure to read our in-depth Hargreaves Lansdown Review. We’ve covered all of the ins and outs so that you can make an informed decision as to whether or not the ISA provider is right for you!

If you’re after a more straightforward Cash ISA, then you will need to look elsewhere – as Hargreaves Lansdown only offer ISAs in the form of stocks and shares, lifetime, and junior accounts.

Pros and cons of Hargreaves Lansdown ISAs

The Pros

  • Choose from a Junior ISA, Stocks and Shares ISA, or Lifetime ISA
  • Highly established firm in the brokerage space
  • Very simple to use platform
  • Offers an alternative to banks and building societies
  • Partnered with the FSCS as an investment firm – £50,000 limit

The Cons

  • No Cash ISAs

Hargreaves Lansdown ISAs: What ISAs are offered?

Hargreaves Lansdown bank logo

Hargreaves Lansdown is an online brokerage platform and thus – falls under the remit of an investment firm. This means that unlike a traditional bank or building society – you won’t be able to obtain a simple Cash ISA. If this is something that you’re after then you will need to look elsewhere. Nevertheless, we have broken the three main ISA products offered by Hargreaves Lansdown below.

1. Stocks and Shares ISA

As is to be expected from a company that specializes in investments, the hallmark ISA available at Hargreaves Lansdown is its Stocks and Shares ISA. For those unaware, a Stocks and Shares ISA is simply a shopping basket that allows you to store your stock market investments. The key selling point is that this so-called shopping basket will protect you from paying a certain amount of tax on your profits (known as capital gains tax) – up to a certain point.

As per the 2019/20 tax year, your Stocks and Shares ISA can contain up to £20,000 worth of stock market investments. Any gains that you make on this £20,000 annual allowance will not be liable for tax. With that being said, regardless of which platform you decide to take a Stocks and Shares ISA from, they all operate in much the same way.

However, Hargreaves Lansdown is potentially an industry leader in this respect, not least because it has one of the most comprehensive stocks and shares platforms in the space. As such, if you are thinking about using the investment firm for your stocks and shares needs anyway, then it makes total sense to set-up a Stocks and Shares ISA concurrently.  The only slight drawback is that you will need to pay an annual charge of 0.45%.

Key Points:

✔️ Invest up to £20,000 per year

✔️ One of the most established platforms in the UK brokerage space

✔️ Thousands of stocks and shares to choose from

✔️ Great customer support

✔️ Open an account online in minutes

✔️ 0.45% annual charge – calculated against your total investments

2. Junior ISA

Putting some money away for your children at the earliest possible opportunity will allow you to achieve a considerable pot for when they eventually turn 18. In fact, if you keep your investments consistent, the impact of compounding interest can amplify your savings very quickly. With that being said, a Junior ISA can help you avoid tax on the money you put away for your child.

In the vast majority of cases, parents will stick with a conventional Junior Cash ISA, meaning that they are guaranteed to make money in a 100% risk-free environment. However, if you have a keen interest in the financial markets and want to make more than the average 2%-3% that Junior Cash ISAs pay, it might be worth considering a Junior Stocks and Shares ISA with Hargreaves Lansdown.

Unlike an adult Stocks and Shares ISA, the Junior equivalent only permits an annual allowance of £4,368. This amounts to a monthly contribution of about £386. As is the case with the adult Stocks and Shares ISA at Hargreaves Lansdown, you can get started with a lump sum of just £100, or £25 per month – and the account opening process takes minutes. Finally, you will also need to pay an annual fee of 0.45% on your investments, so do bear this in mind.

Key Points:

✔️ Invest up to £4,368 per year

✔️ This works out at £386 per month

✔️ Annual fee of 0.45% on your total investments

✔️ Easy account set-up process – takes just minutes

✔️ Thousands of stocks and shares to choose from

✔️ Top-grade research and educational tools

3. Lifetime ISA

The third ISA available at Hargreaves Lansdown is that of its Lifetime ISA. For those unaware, this is an ISA that is targeted to people aged between 18 and 36 years old. The main concept is that by putting money away each month, you stand the chance of saving towards your first home, or for your Golden Years. Either way, your investments will benefit from a government contribution of 25%.

This is capped at £1,000 per year, meaning that your £4,000 annual investment will be worth £5,000. Although you need to be aged between 18 and 39 to actually open the Lifetime ISA at Hargreaves Lansdown, you can continue paying-in until you are 50. In terms of getting your money out of Hargreaves Lansdown, you can do this 12 months after your first investment – as long as it is to purchase an eligible UK property.

If you do not purchase a property, then you’ll need to wait until you are 60 before you can access your cash. If you meet certain conditions you might be able to get your cash-out earlier – but you can all-but guarantee that you’ll lose all of your government top-ups. Once again, the Lifetime ISA at Hargreaves Lansdown will be accustomed to an annual charge of 0.45%.

Key Points:

✔️ Invest up to £4,000 per year

✔️ The government will boost your investments by 25%

✔️ This gives you the chance to increase your investment by up to £1,000 per year

✔️ Open an account between the age of 18 and 39 years old.

✔️ Continue paying – and receiving your 25% boost until you are 50 years old

✔️ Money must be used to purchase a home or for your retirement

Is Hargreaves Lansdown Safe?

Hargreaves Lansdown is often regarded as the hallmark online stocks and shares platform in the UK. The broker offers thousands of stocks and shares, as well as other financial assets such as bonds, funds, and of course – ISAs. Although the online broker is not a bank or building society, it is still protected under the Financial Services Compensation Scheme (FSCS).

FSCS logo on the Hargreaves Lansdown website

However, it is important to note that the rules surrounding an investment firm like Hargreaves Lansdown are different from that of banks and building societies. While the latter will protect your cash deposits up to the first £85,000, investment firms are limited to just £50,000. This shouldn’t be a problem unless you are thinking about investing more than£50,000.

How do Stocks and Shares ISAs work at Hargreaves Lansdown?

The vast majority of UK savers will opt for a stand-alone Cash ISA. While the interest rates available are super low, they are popular because of their guaranteed income, as well as their tax-efficient savings. Moreover, there is no requirement to do anything other than sit and watch your money grow. In the case of ISAs at Hargreaves Lansdown – whether that’s in the form of a Stocks and Shares ISA, Junior ISA, or Lifetime ISA – there is no guarantee that you will make any money.

Screengrab of ISA investment page of Hragreaves Lansdwon with a woman painting in the background

While it is true that a Lifetime ISA does come with a 25% government contribution – in theory, you could still end up with less than what you started with. This is because you are simply using Hargreaves Lansdown as your proprietary stock broker. You will purchase all of your shares via the platform – with the first £20,000 being shielded from tax.

Stock and Shares ISA on Hargreaves Lansdownwith man and woman playng piano in the background

As you may well know, the value of stocks and shares can go up and down. Therefore, just make sure that you understand the risks. If you do proceed with a Stocks and Shares ISA via Hargreaves Lansdown, you are best advised to hold on to your portfolio long-term. That way, you stand the best chance possible of riding out market volatility.

FAQs

Does Hargreaves Lansdown offer a Cash ISA?

Hargreaves Lansdown does not, and cannot offer a traditional Cash ISA. Instead, all of its ISA products centre around the stocks and shares space. Notably, this includes a Stocks and Shares ISA, Junior ISA, and a Lifetime ISA.

Is a Hargreaves Lansdown Lifetime ISA safe?

Your money is 100% safe at Hargreaves Lansdown. However, as an investment firm, your funds will only be protected up to the first £50,000. Moreover, the FSCS protection will not cover you in the event that your stocks and shares go down in value, so do bear this in mind!

How much can I put into a Hargreaves Junior ISA?

As per the 2019/20 limits, you can invest up to £4,368 per year into your Junior ISA at Hargreaves Lansdown. This amounts to a monthly contribution of about £386 if you wanted to keep things consistent. The annual allowance is reviewed each year by the UK government, so this could go up in the very near future.

Does Hargreaves Lansdown charge any fees on its ISAs?

Unfortunately, yes. In fact, regardless of which ISA you decide to open at Hargreaves Lansdown, you will need to pay an annual fee of 0.45%.

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Kane Pepi

Kane holds academic qualifications in the finance and financial investigation fields. With a passion for all-things finance, he currently writes for a number of online publications.