One of the first decisions a UK fund investor faces is not which fund to buy, but which platform to hold it on — and platforms broadly charge in one of two ways: a flat fixed fee (say £10 a month regardless of pot size) or a percentage of assets held (say 0.25% a year). Which structure works out cheaper depends almost entirely on how much money is invested, and getting this wrong can mean paying hundreds of pounds a year more than necessary for an identical set of funds.
How the two fee models actually work
A percentage-based platform charges a proportion of the value of the assets held, usually deducted quarterly or monthly. As the portfolio grows, the pounds-and-pence cost grows with it, even though the amount of admin work the platform does stays roughly the same. A fixed-fee platform instead charges a flat amount — sometimes a single flat fee, sometimes a tiered flat fee that increases in steps as the account value crosses certain thresholds — that does not move with the value of the holdings.
Why platforms choose different models
- Percentage fees feel small and painless on modest sums, which makes them attractive to platforms targeting new investors.
- Fixed fees feel more significant on small sums but become proportionally tiny as a pot grows, which makes them attractive to platforms targeting larger, more established investors.
- Some platforms blend the two: a percentage fee that is capped once the account reaches a certain size, or a fixed fee that only applies above a minimum balance.
The crossover point
Because one model rises with pot size and the other doesn't, there is always a "crossover point" — a portfolio value at which both platforms cost the same. Below that point, the percentage-fee platform tends to be cheaper; above it, the fixed-fee platform tends to be cheaper. Working out roughly where that point sits for any two platforms being compared is the single most useful calculation an investor can do before choosing a home for their ISA or SIPP.
A simple way to estimate it
Divide the fixed fee by the percentage rate. For example, if a fixed-fee platform charges £120 a year and a percentage-fee platform charges 0.35% a year, the crossover is roughly £120 ÷ 0.35% = £34,286. Below that portfolio size, the percentage platform is likely cheaper; above it, the fixed-fee platform is likely cheaper. This is only a starting estimate — real platforms often add dealing charges, tiered percentages, or fee caps that shift the true crossover point.
A worked hypothetical example
Suppose an investor is comparing two hypothetical platforms for a portfolio held entirely in funds:
- Platform A charges a flat £11.99 a month (£143.88 a year), with no dealing charges on fund trades.
- Platform B charges 0.30% a year on the value of fund holdings, also with no dealing charges on fund trades.
| Portfolio value | Platform A (fixed) | Platform B (percentage) | Cheaper option |
|---|---|---|---|
| £10,000 | £143.88 | £30.00 | Platform B |
| £25,000 | £143.88 | £75.00 | Platform B |
| £50,000 | £143.88 | £150.00 | Platform A |
| £100,000 | £143.88 | £300.00 | Platform A |
| £250,000 | £143.88 | £750.00 | Platform A |
In this hypothetical case the crossover sits close to £48,000. For a smaller portfolio building up through regular contributions, the percentage-fee platform starts out cheaper; as the pot grows past roughly £48,000, the flat-fee platform becomes progressively more competitive, and the gap widens every year the portfolio grows further.
Other factors that change the maths
Dealing charges
Many platforms charge a separate fee each time a fund is bought or sold, though fund dealing is frequently free while share and ETF dealing often carries a per-trade charge (commonly somewhere between £1.50 and £12). An investor who trades frequently, or who drip-feeds regular contributions manually rather than through a free regular investment scheme, may find dealing charges matter as much as the headline platform fee.
Multiple account types
Many households hold an ISA, a SIPP, and a General Investment Account across the same platform. Some fixed-fee platforms charge one flat fee per account, meaning a family running three account types pays three fixed fees — which can tip the maths back in favour of a percentage-fee structure, particularly while balances are still modest.
Fee caps
Some percentage-fee platforms cap the pounds-and-pence amount charged on fund holdings (for example, capping the annual fee at £200 regardless of how large the fund portfolio grows). This effectively turns a percentage fee into a fixed fee once the pot passes a certain size, and is discussed in more detail in a separate article on how platform fee caps work.
Practical steps for comparing platforms
- Add up the full annual cost at the current portfolio size — platform fee, dealing charges for the likely number of trades, and any account-opening or exit fees.
- Repeat the calculation for a projected portfolio size in five and ten years' time, based on planned contributions and a cautious assumption about growth.
- Check whether either platform applies a fee cap, and at what portfolio size it would kick in.
- Factor in the number of account types (ISA, SIPP, JISA, GIA) that would sit on the platform, since fixed fees are sometimes charged per account.
- Remember that switching platforms later is possible but not always frictionless — see the separate guide on switching investment platforms — so it's worth weighing convenience alongside pure cost.
How contribution patterns affect the comparison
Most real investors don't hold a static lump sum — they contribute monthly into an ISA or SIPP, meaning the portfolio value used in the crossover calculation is a moving target. This has a practical consequence: an investor who chooses a percentage-fee platform because their starting pot is small may find themselves paying steadily more each year, even before accounting for investment growth, simply because contributions keep pushing the balance upward. Conversely, someone who commits to a fixed-fee platform while still building a small pot may feel the flat fee is disproportionately expensive in the early years, even though it becomes excellent value later.
Modelling a growing portfolio over several years
Extending the earlier hypothetical example, suppose the same investor starts with £15,000 and contributes £500 a month (£6,000 a year), with the portfolio also growing at an assumed hypothetical 5% a year before fees:
| Year | Approx. portfolio value | Platform A (fixed, £143.88/yr) | Platform B (0.30%/yr) |
|---|---|---|---|
| 1 | £21,750 | £143.88 | £65.25 |
| 3 | £35,800 | £143.88 | £107.40 |
| 5 | £51,200 | £143.88 | £153.60 |
| 8 | £77,900 | £143.88 | £233.70 |
In this hypothetical projection, the investor crosses from Platform B being cheaper to Platform A being cheaper somewhere around year four or five. An investor who only looked at year one costs might reasonably choose the percentage-fee platform, but by year eight the fixed-fee platform is saving them roughly £90 a year — a gap that would only continue to widen with further contributions and growth. This is why it's worth projecting forward rather than comparing only the current-year cost.
Tiered fixed fees and blended structures
Not every platform uses a purely flat fixed fee. Many use a tiered structure, where the flat fee itself steps up at higher account values — for example, £8 a month up to £50,000, then £15 a month above that. Others combine a small percentage fee on a first tranche of the portfolio with a fixed fee (or a fee cap) applying beyond a certain threshold. These blended structures mean the simple "divide the fixed fee by the percentage rate" estimate is only ever a starting approximation — the actual crossover point should always be checked against the platform's full, published fee schedule rather than a simplified headline figure, since promotional pages sometimes only show the fee that applies at a single example portfolio size.
Reading a full fee schedule properly
- Check whether the quoted fee applies to the whole account or is charged per product (ISA, SIPP, and GIA charged separately would triple the effective fixed-fee cost for a household running all three).
- Check whether the percentage fee is calculated on the whole portfolio or only on the fund portion, with shares and ETFs charged differently — this materially changes the comparison for a portfolio holding a mix of fund and share investments.
- Look for a worked example in the platform's own documentation, which many providers now publish specifically to help investors estimate their likely annual cost at different portfolio sizes.
Why this matters more than it first appears
A difference of even 0.2% a year in platform charges may look trivial on a statement, but compounded over a working lifetime of pension saving it can amount to a meaningfully different retirement pot, simply because fees are deducted every year, including in years when investment growth is weak or negative. Because ISA and SIPP allowances (£20,000 and £60,000 respectively for 2025/26) encourage regular, long-term contributions, many UK investors will see their balances cross several crossover points over a working life — which is why it is worth reviewing platform costs periodically rather than choosing once and forgetting about it.
Readers should always check current platform charges directly, as pricing structures change reasonably often and HMRC/FCA-related allowances are also reviewed and can be updated each tax year.
Key takeaways
- Percentage-fee platforms tend to suit smaller portfolios; fixed-fee platforms tend to suit larger ones, with a "crossover point" where costs are roughly equal.
- A rough crossover estimate is the fixed annual fee divided by the percentage rate, though dealing charges and fee caps can shift this in practice.
- Dealing charges, multiple account types, and fee caps can all change which structure is genuinely cheaper for a given investor.
- It is worth recalculating the comparison periodically as a portfolio grows, since the cheaper platform today may not be the cheaper platform in five or ten years.
- Always check current, published platform charges rather than relying on older figures, since pricing structures are reviewed and changed by providers from time to time.