ISA: New investors urged to note their National Insurance number as tax year end nears | Personal Finance | Finance
The tax year end this year falls on a bank holiday in parts of the UK, meaning many will be looking to take action now ahead of a long weekend. For those who are looking to make use of their 2020/21 annual allowances – be it relating to ISAs, pensions, or Junior ISAs – there has been a number of warnings issued.
Despite the risk of encountering last-minute challenges, many may still attempt to beat the ISA deadline right up until midnight on April 5.
Each year, Bestinvest sees an ISA being subscribed to online within the final five minutes of the tax year.
However, the investment company warned that “eleventh-hour” investing ahead of the tax year end comes with glitch, as a problem with a bank transfer or a internet connection challenges could foil and attempt to secure an annual allowance.
With this in mind, Jason Hollands, Managing Director at Bestinvest, has shared seven practical tips to beat the upcoming deadline.
It includes ensuring any investors looking to open a new ISA are well aware of what their National Insurance number is.
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1. Make sure you know your National Insurance number
“An NI number is required to open an ISA,” Mr Hollands said.
“If you don’t know your number, this can usually be found on your pay-slip or any correspondence you might have from HM Revenue & Customs.”
2. ISAs and pensions
“Act fast to make your contribution…. but don’t hurry to select your investments.
“Midnight on April 5 is the deadline by which you must secure your allowance, but it is not the point at which you need to decide where to invest.
“A rushed decision on which asset class, market or fund to invest in could back fire and it always makes sense to take these decisions having first reviewed your existing investments and goals.
“There are a couple of options to solve this conundrum.
“The first is to open or top-up your Stocks & Shares ISA, child’s Junior ISA or Self-Invested Personal Pension with cash and the decide later where to invest it once you have taken time to consider your options.”
3. Consider a “ready-made” portfolio.
“A second option, is to opt for a ready-made portfolio. When online investment services offer access to thousands of funds from many different investment companies, the sheer choice can be bewildering.
“An option that many online platforms – including Bestinvest – provide is to select a “ready-made portfolio”. These are typically a fund that spreads you money across a range of funds and markets, to suit a variety of investors’ risk profiles and goals.
“This means the investor doesn’t have to make the choices themselves but delegates this to an investment team.”
4. Make sure you have cleared funds in your account.
“When investing online, it is vital that you have cleared funds in your bank account.
“Most online services allow you to fund your ISA or Pension using a debit card payment, but not a credit card.
“For investors hoping to beat the deadline, this may mean moving funds a couple of days ahead if you savings account is held with a different bank or building society from your current account – so act now!
“Bank fraud departments can sometimes block unusually large transactions, so it may make sense to inform your bank ahead of making your application.”
5. Payment must be from a UK bank account in the name of the applicant (or joint account)
“A friend, relative or company cannot open an ISA on your behalf, so it is important that the payment is made with a debit card in the name of the applicant (or parent/guardian in the case of a Junior ISA) as this will form part of the identification checking process required under anti-money laundering regulations.
6. It is when the application ends, not begins that matters
“Midnight on April 5 is the time when applications need be completed to use 2020/21 allowances, so starting the process a couple of minutes before hand runs the serious risk of failing to get there on time.
“Every year, the final ISA opened online via Bestinvest comes through within five minutes before midnight – don’t play Russian Roulette with precious tax allowances.
“At Bestinvest, we have streamlined the process down to a few minutes but I would urge people to build in plenty of time nevertheless.
“You do not want to lose a valuable allowance due to being interrupted by a child having nightmare or gremlins affecting your Wi-fi. The earlier the process starts, the better the chance of success.”
7. Start early for 2021/22
“Having got your ISA application for 2020/21 over the line, consider eliminating the end of tax-year drama altogether by using your 2021/22 ISA early if you are in a position to do so.
“Setting up a monthly contribution is a great way of feeding your cash in over the year and it will keep you investing through the short term ups and downs.
“It can also be easier on your finances to invest a little, often than finding a large lump sum at the end of the year.”