If you’ve saved into an individual savings account (ISA), you might decide at some stage that you want to move your pot to a different provider.
You may want to move providers to earn a higher rate on your cash savings, or to benefit from lower fees on your investments, for example. The good news is that transferring your ISA from one provider to another is usually a relatively straightforward process, and your account will remain tax-efficient provided you complete the process correctly.
Read on to find out how to transfer your cash or stocks and shares ISA, and what the rules are if you want to move from one type of ISA to another.
Contents
- How do I transfer my ISA?
- Why transfer an ISA?
- Can I transfer between different types of ISAs?
- Does transferring my ISA affect my annual allowance?
- Will I be charged for making an ISA transfer?
- How long does an ISA transfer take to complete?
- Can I transfer investments held outside an ISA into a stocks and shares ISA?
- Learn more about ISAs
How do I transfer my ISA?
The process of moving your cash or stocks and shares ISA to a different provider is usually as easy as setting up a new account. You simply complete your new provider’s ISA transfer form, requesting that your savings are transferred into your new account. Most ISA providers offer an ISA transfer service and do the hard work for you. However, check that you’re able to do this, as not all providers offer this service.
Why transfer an ISA?
The main reason to transfer your savings from one ISA to another is to benefit from greater returns on your money. When it comes to easy access cash ISAs, it’s important to keep an eye on your rate, as this can fall or you may receive more interest elsewhere. Keeping an eye on the top rates and transferring to a more attractive ISA account can be a wise decision. Keep up to date on the best new ISA deals with our article Best cash ISA rates – which cash ISAs pay the most interest?
Bear in mind that there are particular rules around how much you can transfer between cash ISAs in a single tax year:
- If you put money into a cash ISA and then decide you want to transfer it in the same tax year, you can do so, but you will need to transfer the entire amount – so both the capital and interest received. You can’t just transfer some of the money in this account to another provider.
- If you have money in a cash ISA from a previous tax year that you would like to transfer, then you can do this, and either transfer all of it or only some of it if you wish.
If you are transferring money from a cash ISA to another provider make sure that you don’t withdraw the cash and deposit it into your new account directly, as doing so will forfeit its tax-free status. Read more about transferring your cash ISA in our article How do I transfer to a better cash ISA?
Turning to stocks and shares ISAs, you might choose to transfer your account to another provider for a number of reasons. For example, you may find that a different provider offers better customer service, lower fees, or greater investment choice.
Can I transfer between different types of ISAs?
Yes, you can transfer between different types of ISAs. For example, the majority of ISA providers will allow you to transfer savings from a cash ISA into a stocks and shares ISA in order to invest your money, or vice versa. It’s usually also possible to transfer from a cash ISA to an innovative finance ISA. However, it may take longer to process transfers between different types of ISA.
Does transferring my ISA affect my annual allowance?
Completing an ISA transfer doesn’t count towards your ISA allowance. You can make an ISA transfer and still invest up to £20,000 (the annual allowance for the tax years 2022/23, and 2023/24) into your new account on top of the money you transferred. That’s provided that the ISA account that you’re transferring was contributed to in a previous tax year.
Any money that you pay into an ISA will only impact your allowance in the tax year that you pay it in. You can then transfer your pot from one provider to another without impacting your allowance, provided you follow the transfer process and don’t withdraw your money at any point.
Bear in mind that while there is no limit to the number of ISAs you can have in the UK, you can only open one of each type of ISA per tax year. You can’t, for example, make two £10,000 contributions into two different cash ISAs in a single tax year. However, you can still split your annual ISA allowance between different types of ISA, so you could pay £10,000 into a cash ISA and another £10,000 into a stocks and shares ISA in the same tax year.
Will I be charged for making an ISA transfer?
Depending on your provider and the kind of transfer you are making, you may be charged a fee for making a transfer.
However, simple transfers between cash ISAs or from a cash ISA to a stocks and shares ISA are usually often exempt from charges, unless you are leaving a fixed-term deal early, in which case you may be hit with a fee from your old provider.
Transferring a stocks and shares ISA to another stocks and shares ISA provider may involve a transaction charge for the cost of selling your assets, so check how much you’ll be expected to pay before making the transfer.
How long does an ISA transfer take to complete?
The length of time a transfer takes depends on a number of factors. Transferring from one cash ISA provider to another generally takes two weeks or less, while transferring between stocks and shares ISAs usually takes significantly longer, at a month or more if investments take time to sell.
Bear in mind, though, that transferring investments from one stocks and shares ISA to another can be done in one of two ways. You may sell your investments and move your money as cash to the new account, where you can buy the same, or different investments. Alternatively, you may be able to make a so-called ‘in specie’ transfer, where your investments can be moved directly into your new account without being converted into cash. The kind of transfer that your provider performs is likely to impact how long the process takes, as well as how much you are charged.
Transferring from a cash ISA to a stocks and shares ISA or vice versa can take up to a month, although again this will depend on the type of investments involved and transfer process.
Can I transfer investments held outside an ISA into a stocks and shares ISA?
If you hold investments outside an ISA in a trading account that you would like to transfer into a tax-efficient stocks and shares ISA, you can do this using so-called ‘bed and ISA’. This means that your investment platform sells and then immediately buys back your investments for you to minimise stock market losses, though there may be other fees you have to pay as part of this process. The benefit is that you won’t pay Capital Gains Tax (CGT) on future gains made by your investments once they are held in an ISA. Read more in our article What is a Bed and ISA?
Learn more about ISAs
If you want to know more about ISAs and figure out the best kind of ISA to get started with, our articles Everything you need to know about ISAs and Should I invest in a cash or a stocks and shares ISA? are great starting points.
For advice about managing your existing investments, try our article 5 ways to boost your stocks and shares ISA.
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