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How do ISA transfers work?
If you move your ISA to another provider incorrectly you could end up losing your savings' tax-free status. Here is how to transfer your ISA and continue building up your tax-free savings.
What is an ISA transfer?
It is when you move your ISA to another provider without losing your tax-free status.
Money in an ISA needs to be transferred in a specific way, rather than withdrawn as cash, otherwise it will lose its tax-free status.
You can transfer your ISA from previous tax years, or move your total balance across:
For example, say you have £10,000 saved in ISAs during previous years, with £3,000 deposited in one year and £7,000 in another year. You can move across one or both of your old ISA pots to a new ISA without affecting your £20,000 allowance for the current year.
For example, if you have an ISA worth £10,000 and had paid in £3,000 during previous tax years, you can choose to transfer just that amount or the full £10,000.
How do ISA transfers work?
Although all ISA providers must allow you to transfer out, not all ISAs will accept transfers so check before you apply.
Transferring your cash ISA
If you have one or more cash ISAs that you want to transfer, you can:
Transfer to a new cash ISA
Transfer to an existing ISA you hold elsewhere
Transfer to an existing ISA with the same provider (this is called an ISA consolidation)
Transfer to a new or existing stocks and shares ISA
If you want to transfer any money you have paid into your ISA during this tax year, you will have to transfer the whole amount.
Transferring to a stocks and shares ISA is usually free, however there may be fees and charges for managing your investments. Here is more information on stocks and shares ISAs.
Start investing with a stocks and shares ISA
Transferring your stocks and shares ISA
If you have one or more stocks and shares ISAs, you can:
Transfer to a new stocks and shares ISA
Transfer to an existing stocks and shares ISA
Transfer to a new or existing cash ISA
You may have to pay a transfer out fee, which could comprise a percentage of your stocks and shares ISA balance.
Look out for transaction charges that may apply when you transfer your stocks and shares ISA to a cash ISA. This charge covers the cost of selling the assets your stocks and shares ISA has invested in.
If you hold stocks and shares in a non-ISA account, you can transfer them, but not directly. You’ll need to do something called a Bed and ISA, which is where the shares you hold outside the ISA are sold, and then the ISA buys the same investments.
This has tax advantages, as ISA investments are capital gains tax and income tax free, but you will have to pay fees and charges, so you are likely to end up with slightly less than you had before. You can also only transfer a maximum of £20,000 worth in accordance with ISA limits (less if you’ve already used up some of your allowance).
Make money in the the stock market tax free with a stocks and shares ISA
Transferring a junior ISA
You cannot transfer a junior ISA into an adult cash ISA or stocks and shares ISA.
You can only transfer to another junior ISA or stocks and shares junior ISA.
The registered holder of the junior ISA will be responsible for signing the transfer on behalf of the child. However, if you are aged between 16 to 18 years old and the junior ISA is in your name you will be responsible for signing for the transfer.
Partial transfers
A partial transfer is when you choose to only transfer part of your ISA savings rather than the whole lot.
Not all companies allow it, so first you need to check the rules with your current and preferred new ISA providers.
Next decide how much you want to move across.
You can only make partial transfers from your previous years’ allowances. Anything saved into an allowance in this tax year must be transferred in full.
Can you transfer any ISA?
Yes, but you may be penalised if your ISA is a notice or a fixed term account.
For example, if you have a 60 day notice ISA you can give 60 days' notice and transfer your ISA without any penalty.
If you choose to transfer your ISA without giving the notice you will be penalised by your old cash ISA provider before your money is transferred.
To do this:
Get a closure figure from your existing ISA provider to see how the penalty will affect your savings balance, then work out how much more interest you will gain from transferring your ISA.
Only make the transfer if the new ISA will earn you more interest compared to your existing ISA in addition to the penalty.
Restrictions on what you can transfer
While you can transfer your ISA from one provider to another at any time there are some restrictions to be aware of.
For instance, you cannot request a partial transfer for any money invested or saved in an ISA this tax year. It must be transferred in full.
There are also some guidelines that are specific to the kind of ISA you have: If you want to transfer from a lifetime ISA to a different kind of ISA before age 60, you’ll have to pay a 25% fee.
You can transfer cash from your innovative finance ISA to another provider - but you may not be able to transfer other investments from it.
Can you pay in more money when you transfer your ISA?
All ISA transfers let you add more money as part of the application process, as long as you do not exceed your ISA allowance for the current tax year.
Can I transfer my ISA to a family member?
No, you cannot transfer an ISA directly to another person. This is because the ISA tax benefits are for individuals. If you want to give someone else your ISA savings, you will need to withdraw the cash or sell your investments and then pass the money on.
The closest you can come to transferring an ISA is if you die. In this case, your current ISA balance will be added to your spouse’s annual allowance, letting them add it to their own ISA that year without penalty.
What happens if I withdraw money from my ISA?
With the exception of lifetime ISAs, which must be used for an eligible first home purchase, or after age 60 or a terminal diagnosis, you can withdraw money from your ISA at any time.
However, if you have signed up to a fixed-term ISA, you will face penalties if you access the cash before the term ends.
If you have a flexible ISA, you can replace money you’ve removed within the same tax year, otherwise it will count towards your ISA limit.
If you’re removing money from a stocks and shares ISA, there may be fees and charges associated with selling your investments.
You do not have to pay income tax or capital gains tax on money withdrawn from an ISA.
How long does a transfer take?
This depends on whether you are transferring your cash ISA or your stocks and shares ISA.
Your transfer should be completed within these timescales:
Cash ISA: 15 working days
Stocks and shares ISA: 30 working days
If it takes longer, you can complain to the Financial Ombudsman Service.
Some providers will backdate your interest to the day you started your ISA transfer application.
For example, if you started your transfer on the 2nd of the month and it was completed on the 15th, you will have made interest on your ISA from the 2nd.
Ask the provider if they do this before you apply, otherwise you will lose out on the daily interest during the time it takes to complete the transfer.
How much will a transfer cost me?
If you are transferring your cash ISA it should be free, unless you have a fixed term product. In that case, you will face penalties for accessing the money before the term ends. Check your terms and conditions to find out what the charges might be.
If you’re transferring a stocks and shares ISA, you usually have to pay a transfer fee. There might also be transaction charges if you’re transferring to a cash ISA.
Why should you transfer your ISA?
To get a better rate: If you can get a higher interest rate with another provider, then transferring your ISA will make you more money.
To stay within the FSCS limit: If you are worried your total savings will exceed the £85,000 limit, then think about transferring your ISA to another provider.
To keep all of your ISAs together: You may prefer to keep all your ISAs with one provider so they are easier to manage, and some accounts offer a higher interest rate if you have a larger balance.
How to find a new ISA
When comparing ISAs make sure you check:
The interest rate: the higher the better.
How accessible your money will be: do you need to withdraw regularly or can you leave your money for a few years?
If it accepts ISA transfers: if not, you cannot move another ISA into it.
How much it will accept as a transfer in: make sure a new ISA will take all of your existing ISA money if you want to move it all across.
Find out everything you need to know about ISAs here
Apply to transfer your ISA
After choosing a new ISA you need to complete an ISA transfer in form with your new provider, in a branch or online.
The information you will need to give on your ISA transfer form includes your:
Name
Address
Date of birth
National Insurance Number
Existing ISA account number
Existing ISA provider's name
Existing ISA provider's address
How much you want to transfer
This form will also ask if you would like to add new money into the ISA as part of the transfer.
You can only pay in money up to your ISA allowance, and only if you have moved across any money you had already paid into an ISA within the same tax year.
Your new ISA provider will send a request to your current ISA provider to send your ISA across while maintaining its tax-free status.
What happens next?
Once you have completed the transfer form, you do not need to do anything else.
If you have chosen to transfer your entire ISA across, then your new provider will also ask for your existing ISA to be closed and any interest sent across as part of the transfer.
Once the transfer is complete, you will get a closure statement in the post showing the total balance transferred.
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