How Do ISA Transfers Work? | ISA Guides | moneyfactscompare.co.uk (2024)

What is an ISA transfer?

An ISA transfer allows you to move your funds from one ISA to another without losing your tax-free benefits. The process applies both when transferring funds between the same type of ISA and moving your savings to a different type of ISA. This means you could choose to move money held in acash ISA to astocks and shares ISA, for instance.

There are many reasons why you may want to transfer an ISA. It could be another account is offering higher returns or more favourable conditions. Consolidating multiple ISAs into one account could also help make managing your finances easier. Alternatively, you may be transferring your funds to a different type of ISA which better aligns with your financial goals.

Whatever the reason, it’s important to use an ISA transfer when it comes to moving your funds. This is because if you were to simply withdraw and reinvest your money, you’d be using up some or all of your ISA allowance and may also lose your tax-free wrapper.

Consider this…

ISA transfer rules

When it comes to transferring ISAs, there are some key rules to be aware of:

• All providers must allow ISAs to be transferred out; however, there is no obligation for providers to accept transfers in
• While you can transfer any type of ISA, it is at the discretion of your new provider as to which type of ISA they permit transfers in from.
• From 6 April 2024, you can choose to transfer your entire ISA pot or part of your balance, regardless of when you paid the money in. However, some providers may not offer or accept partial transfers so it’s worth checking the terms of the account.
• There is no limit on the amount you can transfer, nor any restrictions on when you can make a transfer.
• Keep in mind, though, the Financial Services Compensation Scheme (FSCS) only protects balances of up to £85,000 in a savings account or ISA.

How do ISA transfers work?

As for completing the transfer, there are a few steps you’ll need to follow:

Check your provider accepts transfers in

While all providers have to allow you to transfer ISAs out, some won’t allow transfers in from all or certain types of ISAs.

This is where our ISA charts can help. You can filter for accounts which accept transfers in by changing the investment type to ‘ISA transfer’ either at the top of the page or by selecting ‘full search’.

Then, by clicking ‘view further details’ next to an account on our chart, you can see the different types of ISA it allows transfers from.

Check if transfer fees apply

Once you’ve found out whether your new ISA accepts transfers in, it’s time to work out whether your current provider charges a fee for transferring out funds. Fixed rate ISAs, for example, will sometimes impose a loss of interest penalty on transfers out.

Similarly, you’ll incur a 25% charge for transferring out a Lifetime ISA to a different type of ISA before the age of 60.

Contact your new provider and complete the ISA transfer form

When you’re confident transferring your ISA is the right decision for you, you’ll need to contact your new provider and request an ISA transfer form. This form will require you to provide some personal details, the name and account details of your existing provider as well as the amount you wish to transfer.

Transferring a stocks and shares ISA

If you’re looking to move funds held in a stocks and shares ISA, you’ll also need to decide which transfer method to use based on your circ*mstances; either an ‘in-specie’ or cash transfer.

• In-specie transfers: Are when you transfer your investments to a new provider. However, this typically only applies if your new provider offers the same investments. This can take up to six weeks to complete, but means your money remains invested throughout the process.

• Cash transfers: This is when you sell your investments, with the proceeds passed on to a new provider.

Transfer out fees can also apply to stocks and shares ISAs, which you’ll need to take into consideration when deciding whether transferring your ISA is the right course of action.

Similarly, you may encounter transaction fees when moving your stocks and shares ISA to a cash ISA to cover the cost of selling your investments.

How long do ISA transfers take?

Transferring cash ISAs can take up to 15 days, while other types of ISA, such as transferring to and from a stocks and shares ISAs, may take up to 30 days.

If your ISA transfer exceeds these timeframes, you can lodge a complaint with your provider. In some instances, you may be entitled to compensation for the loss of interest during the transfer.

If your complaint is rejected, you could consider raising it higher with the Financial Ombudsman Service.

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