With April comes the start of a new ISA season and research by AJ Bell found that those who get started using their renewed £20,000 allowance tend to benefit more than those who delay putting their money to work.
It's not just about being organised with your life admin, it’s also about giving your ISA more time to work its magic.
The research by AJ Bell found that someone who put £5,000 into an ISA at the start of every tax year since 1999 and invested in a typical global equity fund would now be £25,000 better off than someone who didn’t invest until the last day of the tax year.
Making the most of an ISA also brings tax advantages compared to leaving money in a general investment account, which is particularly important now that dividend tax rates have gone up.
Those who invest outside of a tax wrapper must now contend with dividend tax rates having gone up by two percentage points to 10.75% for basic rate taxpayers and to 35.75% for higher rate taxpayers. Meanwhile, the additional rate is unchanged at 39.35% as of 6 April 2026.
Putting money into an ISA locks in the generous tax benefits so you pay nothing to the taxman on future capital gains or income for investments inside the wrapper.
The data tells a fascinating story
To dig into the impact of using your ISA allowance quickly or investing later on AJ Bell ran scenarios that compared investing in a typical global fund every year since ISAs began in 1999.
Early-Bird Erin put £5,000 into her ISA on the first day of each tax year (6 April) and invested in a typical global fund. Up until the end of the most recent tax year (5 April 2026), she would have paid in £135,000 and is now sitting on a pot worth £462,028.
Last-Minute Linda also put £5,000 a year into her ISA each year but she left it until the last day of each tax year (5 April). The difference in returns is striking.
Even though both Erin and Linda contributed the same £135,000 to their ISAs, Linda’s pot is worth £437,035 – an astonishing £24,993 less than Erin’s ISA.
Early-birds benefit from having extra time in the market. Markets go up and down, but they generally rise more than they fall.
Since 1999, the typical global fund has returned on average 8% from the beginning to the end of each tax year and has made a positive return in 17 out of 27 tax years.
So around two-thirds of the time you would have been better off investing at the start of the tax year, rather than waiting until the end
So, how would the numbers stack up if money was drip fed into an ISA rather than an annual lump sum? Drip-Feed Diana paid £416.67 into her ISA every month, beginning on 6 April 1999.
In a single year that contribution adds up to the same £5,000 as Erin’s and Linda’s lump sum payments.
By 5 April 2026, Diana’s ISA was worth £455,027 which is better than Linda’s ISA but not quite as good as Erin’s.
While the early bird investor gets a head start over others, drip feeding money into an ISA can still be a rewarding strategy as you’re not trying to time the market.
Over a long period, you will feed money into your account in both good and bad conditions.
When markets are high, your money buys fewer shares or fund units – but when markets are low, you’ll get more bang for your buck. It’s also hassle-free and can help take some of the emotion out of investing.
Dan Coatsworth: Head of Markets
Dan Coatsworth is AJ Bell's Head of Markets. Dan has been with the company since December 2012 and has more than 18 years' experience in the industry, following the markets and all things investing. He...
