Tax year end scramble: Final Bestinvest ISA account funded just five minutes before the deadline

• Bestinvest’s final ISA investment of the 2022-23 tax year came in 11.55pm on April 5
• A new Junior ISA account was opened at 11.53pm on April 5
• First ISA account of the new tax year was opened at 03.01am on April 6
• First contribution to an ISA in the new 2023-24 tax year was at 5.32am
• First account holder to utilise their full ISA £20,000 allowance for the new tax year carried out the transaction at 6.58am

The start of the new tax year is here and with it comes a fresh Individual Savings Account allowance for savers to utilise. While the adult ISA allowance for the 2023-24 tax year remains unchanged at £20,000, along with the Junior ISA

allowance – also unchanged at £9,000 - Britons are waking up to a very different tax landscape this morning thanks to the raft of frozen or reduced personal tax allowances instigated by Chancellor Jeremy Hunt along with savage cuts to the Capital Gains Tax exemption and the Dividend Allowance.

It’s no surprise then that many savers scrambled to max out their ISA allowances in the race to beat the deadline, with the Bestinvest phone lines kept very busy in the final few hours of the tax year end on April 5. But for investors that failed to use up last year’s tax allowance, it’s too late – that tax allowance has gone.

While it is human nature to leave things until the last minute, Wednesday’s end to the 2022/23 tax year had a greater sense of urgency about it, says Jason Hollands, Managing Director at the DIY investment platform and coaching service, as earners, savers and investors looked for ways to reduce their tax liability ahead of the new tax year.

"Wednesday night was no different to any previous years, with many investors investing right up until the cut-off point. Our telephone lines were open until midnight to receive any last-minute requests and they were certainly very busy.

“This year, however, the volume of calls was more intense as the reality of Jeremy Hunt’s tax raid filtered through to savers and investors in the final hours of the end of the tax year. The UK tax burden is now at the highest level since the Second World War, with the thresholds for paying the basic and higher rates of tax frozen until 2028 and the threshold for the additional rate of tax lowered to £125,140 from £150,000 – measures which will drag millions more taxpayers into higher rates of taxation.

“Meanwhile, the hit to investors has also kicked in with the dividend allowance halved to £1,000 from today, with plans to savage it again in April 2024 to a meagre £500, while the amount investors can realise tax-free from crystallised gains from the sale of assets is now just £6,000 and set to be halved again from April next year to just £3,000.

“The race to beat the deadline and shelter cash and investments from the taxman saw the last ISA account on Bestinvest contributed to at 11.55pm, just five minutes before the deadline at midnight, with the last ISA account – a Junior ISA - opened at 11.53pm.

“While many may be drawing a sigh for relief this morning, concluding they don’t need to think about ISAs for another year, ISAs don’t have to be left until the final moment. Those who want to get ahead this tax year can open or top up their ISAs now – with one Bestinvest customer maxing out their fresh £20,000 ISA allowance in full at 6.58am. Not only does investing earlier in the tax year remove some of the pressure to make a hasty decision; it also means your hard-earned cash will be put to work for longer. After all, as the saying goes ‘the early bird catches the worm’ and in the case of an ISA there is a whole year of potential tax-fee returns to be had. That could have been the motivating factor for the investor who opened a new ISA with us at 03.01am this morning.

“Another option is to take the timing out of the process altogether by investing on a regular basis. Drip feeding your money in to an ISA regularly takes the emotion out of investing: it is all too easy to have your investment decisions clouded by current sentiment or events that shouldn’t really matter if you are investing for the long-term. Regular investing is a great discipline that keeps you going through the ups and down and helps reduce market timing risk as you’ll end up with ‘pound cost averaging’, an average entry price that reflects some days when the market is up and others when it was down.”

Important information

Investments go down as well as up and you may get back less than the amount invested. Prevailing tax rates and reliefs depend on individual circumstances and may change. ISA rules may also change. Nothing in this article is intended to constitute advice or a recommendation, and you should not take any investment decision based on its content.