AJ Bell removed fees for regular investments

j813ys

From 1st May

Alistair31

Excellent, £3/year saving on my LISA account.

Every little helps!

masonic

A bit of peer pressure works wonders sometimes.

intalex

Could do more - LISA bonus and SIPP tax relief both come through ~2 months after the contribution, so potentially have to incur 4 lots of fees (instead of 2) to invest everything without waiting in cash pots…

dunstonh

https://forums.moneysavingexpert.com/discussion/comment/81988272#Comment_81988272

Pre-funding costs a lot of money, and I don't believe any of the low-cost providers prefund. However, if it's important to you, then you can switch to a provider that pre-funds.

The time scale is when HMRC pay the money. That means HMRC and when you pay into it are the two main factors. The time scale is defined. However, the date when the provider submits the claim to HMRC for pension tax relief may vary slightly with providers. Some may do it as early as the end of the month. Some may leave it as late as the sixth of the month (which includes payments received up to and including the 5th). HMRC pays the tax relief on the 21st of the next month (or next working day if the 21st is not a working day). So the range of how long it takes could be somewhere between six and twelve weeks, depending on when you make your contribution.

So if you're seeing it two months later, this would indicate your payments are relatively early in the month.

If you make regular contributions and use a provider that pre-funds tax relief, you get a better return as the tax relief is invested immediately. The exact amount is difficult to quantify because returns will be variable.

However, the example given was a £250,000 fund switch that can cost an investor as much as £192 if done via a platform that does not pre-fund fun switches assuming a rate of return of 7%. That is the equivalent of 0.07%.

If you apply a 65-day delay for the tax relief and disregard any purchase costs (pre-funding providers rarely have them) and make a contribution of £10,000 net. And again, assume 7% return. The cost of not pre-funding is £153. So you should factor that into your cost comparisons when selecting a platform. Not just the headline charges.

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/81988272#Comment_81988272

Providers that prefund, would normally be a more expensive than AJ Bell. Unless you had a good deal with an employer/workplace pension, or a deal via an IFA.

phlebas192

For pension tax relief with AJ Bell:

When is tax relief added to a pension?

The tax relief payment dates depend on the date you make your own payment and your provider. For AJ Bell pensions - if we receive your money on or before the 5th of the month, your basic rate tax relief payment will be paid into your pension on the 25th of the following month.

https://www.ajbell.co.uk/pensions/tax-relief

Enzo_L

https://forums.moneysavingexpert.com/discussion/comment/81988904#Comment_81988904

That aligns with the HMRC timetable for refunding tax relief ……. which is especially annoying if you make a £2880 SIPP contribution on April 6, right at the start of the tax year, because you'll always just miss the monthly cut off and won't get your £720 tax relief until 25 June.

intalex

I'm not saying they should start prefunding the lifetime ISA bonus / pension tax relief, I'm saying they should remove the charge (e.g. £5 dealing fee) for investing the bonus / tax relief when it does come through ~2 months later. It's not necessarily a recurring thing, potentially just a once-a-year thing, but that does double the cost of investing the whole lot with the bonus / tax relief…

masonic

https://forums.moneysavingexpert.com/discussion/comment/81989245#Comment_81989245

For the LISA, if you've subscribed by the 5th of the month, then you will be waiting less than a month.

If you use regular investing to invest the subscription / pension contribution and bonus / tax relief, then you'll no longer pay any fee to do this.

When considering what would be a "once-a-year thing", bear in mind many contribute to their accounts monthly rather than in one go. There is no longer any penalty for drip feeding monthly owing to this change, and it allows any other cash to be mopped up if you adjust your regular investing amount accordingly.

intalex

I guess the point is that it's not instantaneous and so either the principal waits a period of time for the top-up, or the easier option would be to allow investment of the principal promptly and waive the charge on investment of the top-up… would be fair in my opinion, in absence of prefunding.