Should you bother using the allowances?
I won’t cover whether an ISA or pension is worthwhile here, take a look at our ISA and pension pages to get a clearer idea of whether they’ll suit you. But if you think you want to use the allowances do you need to rush?
If you don’t plan to invest more than £10,200 within an ISA (with no more than £5,100 in a cash ISA) in total across this tax year and next then relax, you can simply use next year’s from 6 April as that allowance should suffice.
Otherwise it’s probably worth securing this year’s ISA allowance provided you’re not paying for the ISA ‘wrapper’ and want to buy the underlying shares/funds or save cash anyway.
As for pensions it’s unlikely you’ll fully fund your allowance both this tax year and next (as you can generally enjoy tax relief on the lower of your earnings and £245,000, rising to £255,000 next tax year). However, if you’re a higher rate taxpayer then contributing to a pension this tax year allows you to reclaim the additional tax relief via your 2009/10 tax return; contribute after 5 April and you may have to wait longer.
Do I need to choose the investments now?
No. Buy your stocks & shares ISA via a fund supermarket or stockbroker and you’ll usually have the option to hold cash for up to a few months while you decide which investments to buy. Most pensions also have a cash option which you can use for as long as you like.
What else should I bear in mind?
When investing online you’ll need to have sufficient funds in the current account linked to your debit card. You’ll also probably need your National Insurance number to hand.
Cash ISAs – buying online
Not all cash ISA providers accept online applications, especially if you’re not an existing customer. Here's a couple of examples that do:
Marks & Spencer Money Cash ISA 2.65% (includes 1.25% bonus for 1st 18 months) – you can apply online until 1pm on 5 April and 4pm by phone 0808 002 2222.
NS&I Direct Cash ISA 2.5% - you can apply online until midnight on 5 April.
Stocks & Shares ISAs – buying online
You can buy fund-based 2009/10 stocks & shares ISAs through the Cofunds and FundsNetwork fund supermarkets until midnight on 5 April. Even better, save money by going via a discount broker - read our ISA Discounts Action Plan for full details of 20 discount brokers.
If you want to buy shares, investment trusts or ETFs then most stockbroker self-select ISAs are available online until midnight on 5 April, including Interactive Investor, Alliance Trust Savings and TD Waterhouse.
Pensions – buying online
You can buy several stakeholder and self-invested personal pensions (SIPPs) online until midnight on 5 April. Legal & General accept stakeholder applications online while Hargreaves Lansdown and Funsnetwork accept SIPP applications. Read our Choosing a Personal Pension Action Plan for more details.
Finally, remember that even if a provider accepts ISA or pension applications online up until midnight on 5 April, if the application fails to reach them in time then it’s your problem not theirs. So give yourself plenty of time to complete the application in case of technical glitches.