3

Are there any advantages of opening an ISA account before 5th April if I don’t plan to deposit any significant amount before that day?

3

Are there any advantages of opening an ISA account before 5th April

Only if you want to use up your full allowance for this current financial year. If you are assuming that if you open the ISA this year and can us this year's allowance also next year, you are wrong.

2

Yes, but only in a specific set of circumstances.

In each financial year the government allows you to put into an ISA the ISA allowance for the year plus any amount that you have taken out of ISAs in that year*.

  • So, if you currently have (or can get hold of) this year's ISA allowance, you could open an ISA before the end of the financial year, and deposit the full limit.

  • At the start of the next financial year, you could take that money out and spend it as you'd originally planned to (or repay wherever you got hold of it from).

  • Later on in the next financial year you could deposit in an ISA the amount you'd withdrawn (i.e. this year's ISA allowance) plus the current year's ISA allowance

This obviously only makes sense if you expect to have, at some point next year, more than next year's ISA allowance to deposit. And you can only do it if you have access to the funds to park it in the account over the change in financial year. So, yeah, in only a very specific set of circumstances is there an advantage.


*Note that although the government allows this, not all ISAs include this feature, or allow withdrawal without penalty. Check the Terms and Conditions of individual ISA products if you plan on following the approach in this answer.

  • 1
    Minor note about withdrawing and repaying without affecting the annual ISA allowance: the Ts&Cs of an ISA I have says something along the lines of "This is a flexible ISA so you can replace any withdrawals within the same tax year without reducing your ISA allowance". The implication being that at least some ISA accounts from at least one provider are "not flexible" and you cannot repay withdrawals in this way. Also, some accounts either don't allow withdrawals, or doing so attracts penalties. In other words: check Ts&Cs if you plan on doing this. – TripeHound Apr 4 '18 at 8:01
  • 1
    @TripeHound - Thanks, edited to include. Feel free to tweak if you don't think I've covered your point accurately. – AndyT Apr 4 '18 at 8:05

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