Stocks and shares ISA deadline: is a robo-advisor a good option?


Stocks and shares ISA deadline: is a robo-advisor a good option?
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Tuesday 5 April is the last day you can open, or add to, a stocks and shares ISA and still benefit from the 2021/22 ISA allowance.

So, if you want to open an ISA before the deadline, should you use the services of a robo-advisor? Let’s take a look.

When is the stocks and shares ISA deadline?

The ISA deadline is on 5 April. This is the last day you can contribute to a stocks and shares ISA (or any other type of ISA) in the 2021/2022 tax year.

The ISA allowance is £20,000. This means that you can invest up to this amount within the current tax year. Any future returns your earn won’t be subject to any tax as long as your investment stays in an ISA.

On 6 April, a new tax year begins, which will give ISA holders a fresh £20,000 allowance to use until April 2023. However, if you don’t use your allowance for the 2021/22 tax year before next Tuesday, you won’t get another opportunity. That’s because you can’t carry over any proportion of an ISA allowance you don’t use.

Should you open a stocks and shares ISA through a robo-advisor?

A robo-advisor is an automatic investing tool that can choose investments for you based on your appetite for risk.

For robo-advisors to calculate your risk profile, you’ll be asked a set of questions when you open an account. Your answers will give your artificially intelligent advisor an understanding of your attitude to investing. This will give your robo-advisor the ability to allocate a suitable portfolio.

With robo-advisors, fees are pretty transparent. So if you use one, you won’t have to work out costs of any management fees, trading or platform costs typically associated with normal investing accounts.

Robo-advisors have been growing in popularity over recent years, mostly due to how easy they are to use. For this reason, they’re typically targeted toward newbie investors.

So, if you’d appreciate an artificial helping hand in choosing your investments and you value transparent fees, then opening a stocks and shares ISA through a robo-advisor could be a decent option.

However, if you’d rather pay the lowest fees possible, but want to invest in a mixture of asset classes, then it’s often possible to pay lower fees through a normal stocks and shares ISA. In other words, if paying low fees is your primary concern, you may wish to give robo-advisors a swerve.

The same may also apply if you prefer freedom when it comes to picking investments. That’s because robo-advisors are designed to pick and choose investments for you based on your risk profile. So, if you’d rather have more flexibility, automatic investing tools probably aren’t for you.

Which robo-advisor accounts are popular?

Before considering a robo-advisor, understand that with any type of investing the value of your portfolio can fall as well as rise. This even applies to carefully chosen investments made through a robo-advisor.

If you do wish to explore opening a robo-investor account, it’s worth knowing that they’re available from a number of providers, including Nutmeg, Wealthify and Moneyfarm. All have their pros and cons, so do take the time to read The Motley Fool’s lowdown of each account.

For more options, also take a look at the list of top-rated robo-advisors in the UK.

Are you looking to act before the ISA deadline? Opening a stocks and shares ISA through a robo-advisor is usually straightforward, given that the option of opening your account within an ISA is well signposted within each robo-advisor app. 

Please note that tax treatment depends on your individual circumstances and may be subject to change in the future. The content in this article is provided for information purposes only. It is not intended to be, nor 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.

Don’t leave it until the last minute: get your ISA sorted now!

stocks and shares isa icon

If you’re looking to invest in shares, ETFs or funds, then opening a Stocks and Shares ISA could be a great choice. Shelter up to £20,000 this tax year from the Taxman, there’s no UK income tax or capital gains to pay any potential profits.

Our Motley Fool experts have reviewed and ranked some of the top Stocks and Shares ISAs available, to help you pick.

Investments involve various risks, and you may get back less than you put in. Tax benefits depend on individual circumstances and tax rules, which could change.

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Divyansh Singh

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