Suppose I have already maxed out my 2017 ISA, and I now have a further £20k that I would like to invest. The financial year will end in 4 months (April 2018), at which point my ISA will be open for a further £20k allowance.

I have two options:

  • Invest this £20k now into fund X
  • Wait until April to invest the £20k into fund X wrapped by the ISA

If we assume fund X has an arbitrary fixed interest rate (say 0.5% or 1% per month for easy math), and considering the tax-free advantage of the ISA vs the 4 months headstart of investing now, which option will net me more money?

  • 1
    These two options are not exclusive unless you are talking specifically about one year bonds etc? You can easily invest it in a standard share and deal account in whatever fund you want then sell/transfer it at the start of April and re-purchase it/anything else you want in the ISA? – Philip Dec 12 '17 at 14:06
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    What about dealing fees? – GS - Apologise to Monica Dec 12 '17 at 20:55
  • Where can I get that 1% per month interest rate please?!?! – timday Dec 13 '17 at 17:55

There's little reason not to invest now, traditionally the more time in the market, the better off you are. When the new tax year starts you can "Bed and ISA" i.e. sell and re-buy within the ISA wrapper. If you're playing it safe you're incredibly unlikely to exceed your capital gains allowance within this short time frame, so no tax anyhow.

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