Why wait till April to think about the ISA allowance?

Every April there is a mad rush as people try to beat the annual deadline for ISA contributions.

That can lead to rushed decision-making. When it comes to investing, rushing things can be not only a mistake – it can also be an expensive one.

That is why, now in January, I am thinking about my ISA strategy for 2025 and far beyond (I am a long-term investor, after all).

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Finding the right ISA

Part of that process involves making sure that I have the right Stocks and Shares ISA for my own needs.

Each investor is different and that is one reason why there are so many ISAs available on the market.

While they may seem similar, in fact, they can have significant differences. Even small-seeming differences in fees and costs can add up to a sizeable financial impact over the course of time.

So, my starting point is to review a variety of the Stocks and Shares ISAs that are available to me on the market today (these things change over time).

If I decide that one looks markedly better for me than the one I use at the moment, I would consider transferring my ISA from the current provider to a new one.

Making the best of my allowance

Each year, most investors have an ISA allowance. Different people have different types of ISA, but to keep things simple I will use the example of having a £20K allowance for my ISA in each tax year.

So, between now and the end of the current tax year in April, as I have not made the most of my ISA allowance for this year, I will consider whether I want to (and financially can) maximise the use of my allowance.

That is just a contribution deadline – I can put money into an ISA without needing to invest it straight away (or any time soon, in fact).

I will also think about how much I want to contribute to my ISA in the new tax year that will begin in April. Getting into a regular contribution habit based on a defined plan can be a good discipline to get into, I reckon.

Evaluate my current portfolio

Now is as good a time as any to review the shares I own in my ISA and decide whether any changes are in order.

For example, what should I do with my holding in fashion retailer boohoo (LSE: BOO) (other than weep when thinking about it)?

The clothes are cheap but unfortunately the share has also got cheaper and cheaper. Now three for a pound (with some change too!) the heady days of the boohoo share price topping £4 back in 2020 seem a long time ago now.

I think there is a risk that things keep getting worse. At this point I have lost a lot of confidence in management and rivals like Shein continue to threaten to eat into boohoo’s sales.

Still, boohoo did prove itself and had a good few years. It has a large customer base, some well-known proprietary brands, and has invested heavily in logistics both here and Stateside. For now, I plan to hang onto it in my ISA in the hope of recovery.