How do I transfer an ISA & what are the rules? (2024)

Transferring your ISA should be a relatively straightforward process that you may want to initiate for a variety of reasons.

Find out how long it takes to transfer an ISA and what to look out for during the process in terms of timings and considerations.

What is an ISA?

An Individual Savings Account or ISA is a type of savings or investment account available in the UK, that offers certain tax advantages to encourage people to save or invest money.

ISAs were introduced by the government as a way of helping people grow their savings or investments while shielding them from tax on the returns.

Find out more about investing in an ISA in our helpful guide.

The different types of ISA are:

• Cash ISA

• Stocks and shares ISA

• Junior ISA

• Lifetime ISA

• Innovative finance ISA

Different types of ISA can be transferred, for example cash ISA to stocks and shares ISA, or vice versa.

You can transfer money paid into an ISA within the last financial year, but you must transfer all of it.

If transferring money from previous years, you can transfer all or part of your savings.

If you are planning on transferring a lifetime ISA to a different type of ISA before the age of 60, then you should expect to pay a withdrawal fee of 25 per cent.

What are the rules for transferring an ISA?

The key element of an ISA is the tax benefit, so it’s important when transferring an ISA to follow the rules to avoid increasing the amount of tax owed.

Rules for cash ISA and rules for stocks and shares ISA are similar, as follows:

Rule 1

You can transfer funds from one ISA provider to another of the same type without affecting your annual ISA allowance.

For example, you can transfer funds from one cash ISA to another cash ISA, or from one stocks and shares ISA to another stocks and shares ISA.

Rule 2

You can also transfer funds between different types of ISAs, such as transferring from a cash ISA to a stocks and shares ISA, or vice versa.

However, you should check with your new provider if they accept transfers from the type of ISA you currently hold.

Rule 3

Transfers do not affect your annual ISA allowance: when you transfer funds from one ISA to another, it does not count towards your annual ISA subscription limit.

You can still contribute up to the annual ISA allowance for the tax year to which the contributions apply.

Rule 4

Some ISA providers may charge fees for transferring your ISA to another provider.

Before initiating a transfer, it's important to check with both your current and new providers to understand any associated costs.

Does transferring an ISA count as opening a new one?

Transferring your ISA does not count as opening a new one.

As an example, if you were contributing to a cash ISA and transferred it to a new provider in the same tax year, you would still be able to pay into the new ISA.

How do I transfer my ISA?

The transfer process itself will be handled by your chosen new ISA provider, and they will contact your current ISA provider to initiate the transfer on your behalf.

You will need to fill out an ISA transfer form, which your new provider will supply.

If you don’t complete this form, you won’t be able to reinvest that part of your tax-free allowance again.

It's important not to withdraw the funds yourself, as doing so would lose the tax advantages of the ISA.

Speak to your financial adviser if you are unsure about any part of this process.

When should I transfer my ISA?

An ISA can be transferred at any time, so the right time is more down to personal circ*mstances.

You will need to ensure that you allocate enough time to fully understand the process, as well as researching new providers or speaking to an expert.

It is also prudent to study the small print for your current ISA as well as the new one, to check for fees.

Bear in mind that, as previously mentioned, a lifetime ISA transferred to a different type of ISA before the age of 60 will incur a 25 per cent fee.

Reasons to transfer an ISA

There are several reasons why you may choose to transfer an ISA:

Better interest rates

One common reason to transfer a cash ISA is to take advantage of better interest rates or promotional offers available with a different provider.

By moving your funds to an ISA with higher interest rates, you can potentially earn more.

Visit our financial comparison hub to view ISA products and rates.

Investment opportunities

If you have a stocks and shares ISA, you might consider transferring to a different provider to gain access to a wider range of investment options.

Different providers may offer a broader selection of funds, stocks, or other investment products that align with your investment goals and strategies.

Consolidation and management

If you have multiple ISAs with different providers, transferring them to a single provider can make it easier to manage your savings or investments.

Consolidating your ISAs simplifies tracking your contributions and monitoring performance, and potentially reduces the admin.

Customer service and user experience

The quality of customer service and overall user experience can vary between ISA providers.

If you're unhappy with the service you receive from your current provider or find their online platform difficult to use, transferring to a provider that offers better customer support or a more user-friendly interface can be a valid reason for switching.

Lower fees

Some ISA providers may charge higher annual management fees or transaction costs, compared to others.

Transferring your ISA to a provider with lower fees can help you reduce costs and potentially increase your overall returns.

Lifestyle changes or financial goals

Life circ*mstances and financial goals can change over time, as can your attitude and approach to risk.

If your current ISA no longer aligns with your objectives, such as retirement planning, buying a house, or funding education, you might consider transferring to an ISA that better suits your new goals and situation.

Access to new features or benefits

Different ISA providers may offer additional features or benefits that are appealing to you.

For example, some providers offer cashback rewards, bonus interest rates, or innovative savings features that can enhance your savings or investment strategy.

How long does it take to transfer an ISA?

The transfer process typically takes around 2–4 weeks, but it can vary depending on the providers involved.

Both your current and new ISA providers should keep you informed about the progress of the transfer.

Government guidance on timescales is that transfers between cash ISAs should take 15 working days, with transfers between any other ISA taking up to 30 days.

Unbiased can match you with your perfect financial adviser, to discuss transferring your ISA or any other investment decisions – find your financial adviser now.