Maximising the amount of time your client is invested for over the long term could make a notable difference to their investments. It’s the same reason that platform features like the prefunding of tax relief, switches and investments are so important.
But is the same emphasis always given to using a client’s ISA allowance as soon as possible? Or do we sometimes overlook the obvious? We’ve calculated what that difference could look like, and the result is an impressive £11,980 more for the early investor.
The long term investment examples below are based on the IA Mixed Investment 40-85% Shares sector, and show the amount of additional growth a client could have benefitted from if they invested on 6 April (the beginning of the tax year), versus investment on 5 April (the end of the same tax year), over the period up to 5 April 2024.
Tax Year |
ISA Contribution |
Investing early(6th April each year) value as at 5th April 2024 |
Investing late(5th April each year) value as at 5th April 2024 |
Difference |
|
2014/15 |
£15,000 |
£25,566 |
£23,310 |
+£2,256 |
|
2015/16 |
£15,240 |
£23,683 |
£24,414 |
-£730 |
|
2016/17 |
£15,240 |
£24,412 |
£20,733 |
+£3,679 |
|
2017/18 |
£20,000 |
£27,232 |
£26,702 |
+£530 |
|
2018/19 |
£20,000 |
£26,611 |
£25,258 |
+£1,353 |
|
2019/20 |
£20,000 |
£25,258 |
£28,310 |
-£3,052 |
|
2020/21 |
£20,000 |
£28,012 |
£21,939 |
+£6,073 |
|
2021/22 |
£20,000 |
£21,776 |
£20,857 |
+£919 |
|
2022/23 |
£20,000 |
£20,954 |
£21,839 |
-£885 |
|
2023/24 |
£20,000 |
£21,836 |
£20,000 |
+£1,836 |
|
|
|
|
Total |
+£11,980 |
A generous ISA allowance
The ISA allowance remains at a generous £20,000, making the impact of investing early even more important. If you have clients with regular ISA contributions, this potential uplift is a perfect opportunity to review contributions to ensure allowances are being maximised and you can make any necessary changes, online.
And don’t forget, our Flexi-ISA functionality gives your clients even greater flexibility should they need to access some of their ISA to cover unforeseen short-term cash needs.