For investors with the means to do so, initiating investments at the beginning of the tax year can significantly enhance long-term returns, according to financial experts. This timing is crucial, as many individuals tend to procrastinate, waiting until the final weeks—or even minutes—before the £20,000 annual ISA allowance deadline on April 5.

Research indicates that those who invest early in the tax year outperform both habitual investors and last-minute decision-makers. If you often find yourself delaying investments despite having available funds, it might be time to rethink your strategy.

James Norton, who leads retirement and investments at Vanguard, observes, “Many people rush to maximize their ISA allowance at the tax year’s end rather than the beginning, missing out on nearly a year of tax-efficient gains.” He emphasizes the importance of making your money work for you as soon as possible, tailored to your financial situation.

Norton further advises, “Ultimately, taking some action is almost always preferable to inaction—especially when inflation threatens to erode your savings.” For those with the capability, adopting an early investment approach could prove beneficial in the long run.

But he adds: ‘The key is to make your money work for you as early as you can, in a way that fits your circumstances. 

‘Ultimately doing something is almost always better than doing nothing – especially when the alternative is your cash being eroded by inflation.’

Money experts explore how using different approaches to investment timing can affect returns over the long term, and offer some tips for the new tax year.

New tax year: The £20,000 annual Isa allowance resets at midnight on 5 April every year

Investing £5k a year

AJ Bell looked at how much someone would have made investing £5,000 a year since Isas were launched in 1999 – in monthly instalments, or at the start or end of the tax year.

It based performance on a typical global fund, by using the total return of the IA Global sector average up until 5 April 2026.

Someone taking this approach would have paid £135,000 into their Isa over the years, with the regular investor putting in £416.67 every month to match the others. So how much would they have made?

Early-Bird Erin: £462,028

Drip-Feed Diana: £455,027

Last-Minute Linda: £437,035

Difference between early bird and laggard: £24,993.

Investing your full Isa allowance

Fidelity analysed the same three timing strategies when investing in an Isa over 25 years

It used the total return of the FTSE All Share to measure performance.

And it assumed someone used their maximum Isa allowance each year – this was initially £7,000, but the limit was hiked many times over the years and has been £20,000 since 2017/2018. 

Paying in the full amount possible would have cost you £306,560 over 25 years.

Early Shirley: £777,803

Monthly Monty: £755,399

Last-Minute Lara: £735,646

Difference between early bird and laggard: £42,157

Investing tips for a new tax year

Camilla Esmund, senior manager at Interactive Investor, offers guidance on making the most of your new Isa allowance.

1. Let time do the heavy lifting

Starting early in the tax year gives your investments longer to grow and benefit from compounding, where your returns start generating their own returns over time.

Even modest contributions made earlier in the year have more time to build than money added later on.

2. Don’t let market noise knock you off course

There will always be uncertainty, whether that’s economic news, market volatility or global events. It can feel more comfortable to wait until things ‘settle,’ but markets rarely move in a straight line.

Unfortunately, market ups and downs are part and parcel of investing, but understandably they are not easy to stomach.

History shows us that markets can and do bounce back over the long-term.

3. Use regular investing

For those who feel cautious about investing a lump sum, regular investing can be a reassuring alternative.

By drip-feeding money into the market, this can help smooth out volatility, so it can be effective way to manage risk and build confidence over time.

It also helps build discipline. Setting up a monthly direct debit into a diversified Stocks & Shares Isa can make investing feel more manageable and remove the temptation to delay decisions.

4. Make the most of your Isa

The new tax year brings a fresh tax-free allowance for a Stocks and Shares ISA, a valuable way to protect your investments from income tax, dividend tax, and capital gains tax.

You don’t need to use the full allowance straight away. You can build towards it gradually across the year, depending on what you can afford.

5. Stay savvy on fees

Keep an eye on fees. We can’t control the markets, but we can control how much we pay to invest.

If you know what you are paying in fees and you’re confident that those fees are not eating into your pot, which should be compounding over time, you’re going to be keeping more of your money.

DIY INVESTING PLATFORMS

AJ Bell

AJ Bell

Easy investing and ready-made portfolios

Hargreaves Lansdown

Hargreaves Lansdown

Free fund dealing and investment ideas

interactive investor

interactive investor

Flat-fee investing from £4.99 per month

Freetrade

Freetrade

Investing Isa now free on basic plan

Trading 212

Trading 212

Free share dealing and no account fee

Affiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.

Compare the best investing account for you