How to give your ISA a last-minute boost

If you are yet to open an ISA account, consider the steps you need to take.

Consumers have until Tuesday to use their £20,000 tax-free Individual Savings Account (ISA) allowance. Many seasoned investors are aware of this deadline and will have put their finances in order. However, there are still factors you can consider for last-minute additions to maximise your ISA pot.

On the other hand, some investors are yet to open their ISA account, so there are a few essential steps you will need to consider if you are to make the deadline.

While the current ISA deadline is Tuesday, 5 April 2022, savers investing or depositing further funds into an ISA via a chosen provider should consider their potential, separate deadlines. Often, different providers have their own ISA deadlines which are earlier than 5 April in order to process your application or deposits.

When it comes to paying into your fund, you should remember that you cannot add money to your ISA via a credit card. So, if you are planning on adding money to your ISA account, make sure your current account is topped up with the necessary funds.

At AJ Bell, many consumers are considering global funds and trusts for their ISA portfolio.

“As we hurtle towards the end of the tax year, last-minute ISA investors have been demonstrating their devotion to a global investment strategy,” said Laith Khalaf, Head of Investment Analysis at AJ Bell.

He then elaborated that, in March, eight out of the ten most popular funds AJ Bell Youinvest customers chose had “a broad global remit”.  

This is despite the fact that the FTSE All Share outperformed the MSCI World Index by around 1.5% this calendar year.

“Only one of the top ten invests predominantly in UK equities, which highlights the gulf in sentiment between funds which invest domestically, and those which spread their wings internationally,” he said.

The following table displays the most popular funds and trusts bought by investors in the AJ Bell Youinvest ISA between 1 and 28 March 2022.

If you are considering an Innovative Finance ISA (IFISA) with lower risk, then consider allocating your money into one backed by a physical asset. 

It is key to note that IFISAs are not protected by the Financial Services Compensation Scheme(FCA), so any fundamental losses via this investment vehicle cannot be recompensated.

So, to minimise risk, consider a provider with a vested interest in a physical asset rather than unsecured lending or consumer loans. If a property, for example, is financed via a secured loan this will be used as collateral, which means your investment is somewhat protected. 

If you are yet to invest in an ISA before the end of the tax year, all hope is not lost. As indicated above, the deadline to open an ISA is approaching, so you will have to move quickly.

Firstly, if you are moving a large sum of money, make sure you clear this with your bank first. This will avoid your bank blocking any transactions if you would like to spend some more time finding the right ISA for you.

When you open an ISA, you will need to be a UK resident and have a National Insurance number. This information can be found on your payslip.

You need to be at least 16 years of age to open a Cash ISA, 18 years old for a Stocks and Shares or Innovative Finance ISA, and 18 years of age, but under 40,for a Lifetime ISA.

For Junior ISAs, the parent or legal guardian will be required to open the account on the child’s behalf. Any contributions to a Junior ISA will have to be made in the parent’s or legal guardian’s name.