Whether you are trying to switch to a different type of ISA, secure a better interest rate on your cash ISA savings or consolidate your money, it’s important to understand how to transfer an ISA before moving funds.
If you withdraw the money and pay it into another account, rather than transferring the ISA, you will lose the tax advantages.
Transferring an ISA can be a straightforward process, but it is essential to understand what steps to take so money can be moved efficiently and without incurring tax bills. Here’s everything you need to know.
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How to transfer an ISA to another provider
You can transfer all or part of your ISA from one provider to another, at any point of your choosing. However, it’s important to research the different types of ISA and options available to find the option that best suits your needs.
Once you decide to transfer an ISA to another provider, you will need to contact the provider you wish to move your account to. This can help to determine whether the new intended ISA allows transfers in.
You will then be required to fill out an ISA transfer form. This document will ask for details such as your name, date of birth and National Insurance number.
After submitting an ISA transfer form, providers should do the rest of the hard work, moving the money over into the new account.
It is important to use this method to transfer an ISA. If you withdraw your money instead, you will instantly lose the tax benefits of the ISA, and you will have lost that part of your annual ISA allowance.
This tax-free allowance lets you put up to £20,000 into ISAs each tax year (including a £4,000 limit for Lifetime ISA deposits), and the maximum amount resets on April 6.
You can also choose to transfer part of your ISA deposit to a new provider. Since 6 April 2024, ISA holders can undertake a partial transfer of their current year subscriptions, as well as a full transfer.
Some providers do not offer this option though, so you should check ahead of time with your chosen provider.
How long does it take to transfer an ISA?
While bank transfers are often almost instantaneous, the same cannot be said for ISAs, which tend to take substantially longer to transfer.
The transfer time will ultimately vary depending on the provider a person is using, however, cash ISA transfers are the fastest, typically taking no longer than 15 working days.
This will usually be slightly longer for other types of ISAs, with stocks and shares ISAs and innovative finance ISAs expected to transfer within 30 days. This is because there are various additional steps to take into consideration with this type of account. For example, a stocks and shares ISA may have to be re-registered if a person is switching to a new provider.
There are ways savers could potentially make the process of transferring an ISA quicker. Discussing the transfer with both current and new providers will likely help to smooth out the process, as will ensuring all paperwork is accurate and up-to-date.
Experts typically suggest busy transfer times, such as the end of the tax year, should be avoided for those hoping to secure a fast transfer.
If you are unhappy with the length of time your ISA transfer has taken, you should contact the ISA provider. If you deem the response unsatisfactory, you can directly contact the Financial Ombudsman Service, with evidence of your transfer request.
Our guide on ISAs vs savings accounts looks at the pros and cons of these types of accounts.
Does an ISA transfer count as a new ISA?
An ISA transfer does not count as a new ISA, and while you may need to set up a new account to move your money to, the savings can also be transferred to an already existing ISA.
The money you have already put into your ISA will remain tax-free even if you transfer it to another ISA, and you can continue to build on the savings you have already amassed.
There isn’t a limit on the number of times a person can transfer an ISA in one year, providing flexibility to savers looking for better options for their money.
Does transferring an ISA affect annual ISA allowance?
An ISA transfer does not count towards your annual ISA allowance.
If you make a subscription to an ISA during the current tax year, that contribution will count towards your annual allowance of £20,000. This is regardless of whether or not you later transfer it to another ISA. Any transfer you make of the subscription will not reset or increase the limit.
For example, if you deposit £1,000 into an ISA, you will have used £1,000 of the £20,000 allowance, leaving £19,000 available. However, if the money is then transferred to a different ISA, the transfer itself will not count as a new subscription. Therefore, the ISA investor will still only have £19,000 of the allowance remaining in the same tax year.
There have also been recent rule changes concerning ISAs that benefit those who wish to hold multiple accounts, and potentially make multiple transfers.
There are four different types of ISA (cash ISAs, stocks and shares ISAs, Lifetime ISAs and innovative finance ISAs) and previously, savers could only put money into one of each type of ISA each tax year.
As of 6 April 2024, you can now open and pay into more than one ISA of the same type in the same tax year, as long as the amount does not exceed the maximum allowance of £20,000. This doesn’t include the Lifetime ISA. You can only pay into one Lifetime ISA each tax year, up to a limit of £4,000 (which is included in the annual ISA allowance).
The change allows “greater flexibility”, explains Andrew Prosser, head of investments at InvestEngine. He adds that it lets savers and investors “try out different accounts if they find a better offer elsewhere, such as lower account fees and the opportunity to invest in different types of funds”.
While transfers between providers do not impact ISA allowances, savers will have to bear fees in mind when moving their money. In certain circumstances, there may be a penalty payment or a fee for transferring an ISA, which is why it is important to read the terms set out by both old and new providers.
A new provider may also levy an ongoing charge or a platform fee once the ISA is transferred. Checking this before the transfer process begins could reduce the chances of a nasty surprise later down the line.
Can you transfer an ISA to another person?
Although some of the rules around ISAs have recently changed, one remains the same: an ISA cannot be transferred to another person.
“The tax benefits for an ISA account are only intended for the person who opened it. If you’d like to give the money in your ISA to someone else, you’d have to close the account and transfer it there,” says Prosser.
There are, however, certain ISA transfer rules that come into play if your spouse or civil partner passes away. In this case, you can inherit their ISA allowance, but will need to contact the relevant provider for further information.
Since April 2015, people have been able to make use of the ISA benefits belonging to their deceased spouse or civil partner if they passed away on or after 3 December 2014.
This does differ to inheriting the money contained within the ISA, as these funds are allocated to whoever was nominated in the individual’s Will.
What are the benefits of transferring an ISA?
There are several benefits savers can obtain by transferring their ISA to a new provider. For example, finding a new ISA may help you secure a better return on savings or investments.
“ISAs should be the first option for personal savings and are often the cornerstone of a wider portfolio”, says Steve Jordan, adviser and director at Five Wealth. Consequently, for those looking for an easier way to keep track of their savings and investments, consolidation of multiple ISAs into one account could be a suitable option.
Consolidation is all about time management, as you “don’t have to keep track of the performance of multiple ISAs,” adds Prosser.
Additionally, an ISA transfer can help with risk management. For example, cash ISA savers may wish to avoid the eroding impacts of inflation by putting their money into a stocks and shares ISA. This does carry risk, and investors could get back less than they initially put in. However, in the long term, there is potential to grow your money.
In contrast, those looking to substantially reduce risk for short-term goals may wish to transfer money out of investments and into cash savings, particularly if they wish to access their money in the near future.
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