Coronavirus - we're here to help
From how to access your account online, scam awareness, your wellbeing and our community we're here to help.

Skip to main content
  • Register
  • Help
  • Contact us
  • Log in to HL Account

How early should you use your ISA allowance?

We look at the benefit of opening your ISA now, rather than later.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

Over the years, a Stocks and Shares ISA has become the core of many investors’ portfolio. It’s a simple way to invest for your long-term future, free of UK income and capital gains tax.

The new tax year started today (6 April). You can now shelter up to £20,000 in your ISA before 5 April next year. This raises the same question each year – should you use your allowance early, wait until the end of the tax year, or spread it throughout the year?

This article isn’t personal advice. If you're not sure what’s right for your circumstances, please ask for advice. Tax rules can change and the benefits depend on your personal circumstances.

Early ISAs trump last minute ISAs?

Even under normal circumstances, it’s really hard to predict how the stock market will perform over the next year. At the moment, it’s nearly impossible.

We’ve looked at the return from investing £5,000 each tax year in the UK stock market since Stocks and Shares ISAs launched in April 1999. One invests on the first working day of the tax year, the other on the last working day.

There have been some difficult times for investors since the ISA’s launch. The dot-com crash, the Iraq War, the financial crisis and the unprecedented events of today.

But whichever option you took, you’d have still made a good return on your investment with both returning over 56% growth, not including charges. However, you’d have been £5,000 better off overall by investing at the start of each tax year. There are no guarantees this will happen in the future, past performance isn’t a guide to the future.

All investments can rise and fall in value so you could get back less than you invest.

Investing on the first or last day of the tax year

Scroll across to see the full chart.

Past performance isn’t a guide to future returns. Source: Thompson Reuters Eikon 06/04/99 to 30/03/20. Includes 2019/20 subscriptions for both.

Find out more about the HL Stocks and Shares ISA

Spread your ISA over the course of the year

With HL, you can take advantage of your ISA allowance without doing it in one go. You can spread your investment over the year by investing on a monthly basis.

This is great for people who want to invest, but don’t have lumps sums of cash available. You can start a Direct Debit with as little as £25 a month.

It’s also an option if you’re worried about investing at the moment. Investing on a monthly basis gets rid of some of the emotional barriers to investing. And it spreads the cost of your investment, removing some risk if markets fall in value in the short-term. Your regular investment could even buy more of the same investment if the market falls, but the reverse is true if markets rise.

Find out more about investing monthly


What did you think of this article?

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

Editor's choice – our weekly email

Sign up to receive the week's top investment stories from Hargreaves Lansdown. Including:

  • Latest comment on economies and markets
  • Expert investment research
  • Financial planning tips
Sign up

Related articles

Category: Shares

How we pick our Five Shares to Watch

Investing beginner? How our share research team choose our five shares to watch

Nicholas Hyett

27 Nov 2020 5 min read

Category: Investing and saving

£96 billion inflation blow for pensioners and investors

Plans to phase out RPI inflation confirmed. Here’s how it’ll impact savers and investors.

Sarah Coles & Isabel McDougall

27 Nov 2020 3 min read

Category: Essentials

Investing for beginners – how to choose an investment platform

Trying to choose a UK investment platform? Here are our top tips to getting started.

C J Hill

25 Nov 2020 4 min read

Category: Investing and saving

NS&I interest rates slashed – how to get more from your savings

National Savings and Investments (NS&I) has cut some of its bond and interest rates to rock bottom. Here’s how you could get more from your cash savings.

Ryan Kenny

24 Nov 2020 4 min read