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Experienced Investor

Last minute ISA investment tips

Emma Lunn
Written By:
Emma Lunn

The countdown to midnight on 5 April – the end of the tax year – is on. But there’s still time to use up your ISA allowance.

This year’s ISA limit is £20,000. Unlike pensions, where unused allowances from previous years can be used at a later date, unused ISA allowances are lost forever if they are not claimed by the deadline.

With inflation set to jump this year and tax rises only partially cushioned by the July National Insurance threshold boost announced in the Spring Statement, it’s never been more important to build up a tax-free savings nest-egg that will be working hard for you against the twin challenges of rising prices and frozen tax thresholds.

Jason Hollands, managing director of online investment platform Bestinvest, said: “It’s easy to be swayed by the white noise of the latest fund recommendations into an impulse purchase. Or to be turned off altogether by short-term dangers hanging over the markets. A rushed decision on which asset class, market or fund to invest in could backfire. It always makes sense to take long-term investments decisions having first calmly reviewed your objectives and strategy.

“If you feel you need more time but don’t want to lose your allowance then open your ISA with an initial holding in cash. This is an option available with most online investment services, including Bestinvest. Having secured your allowance, you can then invest it later when you are comfortable with your investment choices. Investing in a series of lump sums – known as phasing –  will also help reduce the risk of getting your market timing wrong.”

Tips for last-minute investing in an ISA

  • Make sure you have cleared funds in your bank account as you must make payments into an ISA with a debit card – you can’t use a credit card.
  • The payment must be made with a debit card in the name of the applicant (or parent/guardian in the case of a Junior ISA) as this will form part of the identification checking process required under anti-money laundering regulations. A friend or business cannot open an ISA on your behalf.
  • Some bank fraud detection teams may block large transfers, so it can make sense to notify your bank ahead of the transfer – or leave yourself time to sort out the checks.
  • A National Insurance number is required to open an ISA. If you don’t know your number, this can usually be found on a payslip, as well as on correspondence from HMRC.
  • While you can invest just minutes before midnight, try not to leave it this late, as internet speeds or other technical issues can foil your plans. Midnight is the deadline by which your application must have completed.
  • Consider setting up a direct debit or investing early in the new tax year, to avoid putting yourself under time pressure again. Plus, cash invested earlier in the tax year will hopefully be working away, earning potential returns all year long rather than being eroded by inflation – so it makes sense not to delay if you have funds available to invest.