The Isa deadline is looming and investors are being urged to put money into their plans now even if they do not invest it straight away
With the Isa deadline of April 5 fast approaching, investors are being urged to put money into their plans now, even if they do not invest it straight away.
By doing this, they will be able to secure the tax-free status of any of their remaining £20,000 allowance for this tax year, before a fresh £20,000 allowance comes into effect on April 6.
All investments held inside an Isa are free from both income and capital gains tax.
Act fast: All investments held inside an Isa are free from both income and capital gains tax
Laith Khalaf, a financial analyst at investment platform AJ Bell, says: ‘The most important thing to do by April 5 is to get your money into an investment Isa. You don’t have to invest it right away.
‘If you’re running low on time, simply park it in the account to give yourself breathing space to think about where to invest it. You can also choose to drip feed the money into the market.’
If you intend to be a last-minute Isa investor, you will not be alone. Sarah Coles, personal finance analyst at Hargreaves Lansdown, says almost a fifth of people who use their Isa allowance this tax year will leave it to the last minute.
She adds: ‘Men are more likely to do this than women and younger people are also more likely to be ‘last-minuters’.’
If you prefer to hold your money in an investment fund within your Isa while you think about longer-term investment choices, Khalaf suggests a global index tracker fund, such as Fidelity Index World.
He says: ‘With an annual charge of just 0.12 per cent it’s a cheap option, and it will keep pace with global stock markets while you decide what to do next.’
Holly Mackay, founder of Boring Money, says investors taking out an investment Isa this week must decide if they want a plan that allows them to manage their investments or a ready-made portfolio.
For an Isa that is fairly priced and good for investing in both shares and funds, Mackay recommends AJ Bell’s Youinvest.
Investors wanting to trade just shares should look at Freetrade, which charges £3 a month, with no trading costs. Those with little clue about investing could look at Nutmeg, which offers ready-made portfolios.
As well as investing in a stocks and shares Isa, people can choose a cash Isa, though current interest rates are unattractive.
Those with children can invest – or save – £9,000 a year in a Junior Isa.