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Invest early – help maximise your clients’ investments

Maximising the amount of time your client is invested for over the long term can make a notable difference to their investments. It’s the same reason that platform features like prefunding 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?

The long term investment examples below are based on the UT 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 6 April 2020.

ISA

Tax year

ISA contribution

Investing early (6 April) value as at 6 April 2020

Investing late (5 April) value
as at 6 April 2020

The difference investing early had

2010/11

£10,200

£15,426

£14,493

£933

2011/12

£10,680

£15,169

£15,302

-£133

2012/13

£11,280

£16,161

£14,438

£1,723

2013/14

£11,520

£14,745

£13,773

£972

2014/15*

£11,880

£14,203

£12,990

£1,212

 

Total

£4,708

 

A significant boost for ISAs 

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. 

*In the 2014/15 tax year the stocks & shares ISA allowance was increased to £15,000 with effect from 1 July 2014. For the purposes of the comparison, the ISA allowance on 5 April 2015 is assumed to be £11,880.

 

For financial advisers only. Not to be relied on by consumers.


 

 

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