How to Transfer an ISA

If you’re looking to transfer your ISA, you’ll be pleased to find out that it can be simple and straightforward to move your savings or investments elsewhere.

The majority of ISA providers are willing to both arrange and accept ISA transfers allowing you to move your funds to a new platform. Make sure you read my list of the Best Stocks and Shares ISAs first to find the right platform or broker for you.

Find out how to transfer an ISA right here, including what you’ll need, how long it typically takes, and the pros and cons of doing so.

What do you need to transfer your ISA?

To transfer an ISA, you will need to fill out an ISA transfer form with your new provider. Most providers will allow you to do this online. You can also download the form, fill it in by hand, and post it. They will then contact your existing provider to request a transfer of your funds.

The ISA transfer form will require you to fill in your personal information, typically including your:

• Full name and title
• Date of birth
• National Insurance number
• Permanent residential address
• Current ISA account number
• Bank account details

You will then need to sign a declaration and confirm which type of ISA you are transferring.

Bear in mind that not all platforms and providers accept transfers. Check whether the provider you want to use does accept transfers to avoid disappointment.

Full or partial transfers

When transferring your ISA, you will also have the option to make a full or partial transfer – essentially whether you want to move the entire value of the account or just a portion of it.

You might choose to only move part of your ISA to have some extra diversification, or because you want to make the most of features from both your existing and new provider.

Bear in mind that if you want to transfer money that you’ve invested in an ISA during the current tax year, you must transfer all of it.

Does transferring an ISA count as opening a new one?

When you transfer funds to your new provider, they will need to open a new ISA on your behalf. So technically, transferring an ISA does count as opening a new one.

Even so, as you have arranged an ISA transfer between your current provider and your new one, it won’t use any of your remaining ISA allowance to move the funds. This is because the assets in your ISA were never removed from the ISA wrapper.

As a result, while it will involve opening a new ISA with a different provider, it will almost be as if you simply moved your existing account over to them.

This also means that you can move the entire value of an ISA that exceeds the current allowance threshold without facing a tax bill or using up any remaining allowance you have in that tax year.

Of course, you will now have to pay any costs and fees associated with your new ISA provider, rather than your original one.

Transferring different kinds of ISAs

There are quite a few different ISA products available on the market, each with its own range of features and benefits.

Cash ISA

A Cash ISA is, unsurprisingly, a type of ISA that lets you hold your money in cash.

Cash ISAs allow you to hold your money free from Income Tax and Capital Gains Tax, including any interest earned. You might not think this is an issue as interest is typically tax-free anyway. However, you actually have a set allowance for interest called the “Personal Savings Allowance”.

In the 2021/22 tax year, this personal allowance currently stands at £1,000 for basic-rate taxpayers and £500 for higher-rate taxpayers. Additional-rate taxpayers receive no Personal Savings Allowance.

So, if you have a lot of money held in cash, a Cash ISA could be a great choice to make sure you don’t pay tax on any interest you earn.

Similarly to normal savings accounts, you can open either an easy-access account if you want to dip in and out, or a fixed-rate Cash ISA if you want to lock away your money in return for a better interest rate.

Transferring a Cash ISA

Cash ISAs are potentially the easiest to move as it’s generally more straightforward for providers to transfer cash than other assets.

Simply fill in the transfer form with the necessary details, return it to your provider, and they’ll do the rest.

How long does it take to transfer a Cash ISA?

Most estimates for Cash ISA transfers say that your transfer should be completed within 15 working days. Check with your new Cash ISA provider for an accurate estimate of how long this process may take.

Stocks and Shares ISA

A Stocks and Shares ISA is a great way to invest your money in the stock market.

You can hold a huge variety of assets in a Stocks and Shares ISA, from individual stocks and shares to funds, trusts, bonds, foreign investments and more.

Many platforms and fund supermarkets now offer their own Stocks and Shares ISA that give you direct access to the investments they provide.

As with any other ISA, any investment returns generated in your Stocks and Shares ISA will be entirely free from Capital Gains Tax.

Transferring a Stocks and Shares ISA

Transferring a Stocks and Shares ISA is slightly more complicated as it involves assets. Typically, it can be done in one of two ways: as a cash transfer, or “in specie”.

Cash transfers involve liquidating your assets into cash, meaning your provider will have to sell investments. These will then be repurchased when the funds arrive with your new Stocks and Shares ISA provider.

Alternatively, an “in specie” transfer (in Latin meaning “in the actual form”) involves moving your money in investment form.

If you only want to transfer part of your Stocks and Shares ISA, you will need to provide a list of the assets that you want to transfer.

How long does it take to transfer a Stocks and Shares ISA?

Estimates for transferring a Stocks and Shares ISA vary from provider to provider, but range from as little as fours weeks if your holdings are straightforward to as long as 12 weeks if you have funds or foreign holdings.

Lifetime ISAs

A Lifetime ISA, also sometimes known as a “LISA”, is a type of account specifically for 18 to 40-year-olds who are looking to buy a first home or make an early start on their retirement savings. You can open either a Stocks and Shares or a Cash Lifetime ISA.

When you make contributions to a Lifetime ISA, you’ll receive a 25% government bonus on top. There is a separate Lifetime ISA allowance of £4,000 per tax year, meaning you can receive up to £1,000 in government bonus each tax year. This £4,000 does count towards your overall ISA allowance.

It’s important to note that there are strict withdrawal criteria when using a Lifetime ISA. If you withdraw money from your account for any other reason than first homebuying or retirement, you’ll face a 25% withdrawal fee.

Transferring a Lifetime ISA

As with the other kinds of ISAs, moving your Lifetime ISA involves filling out a transfer form with the necessary information.

One extra thing to bear in mind when transferring a Lifetime ISA is that you’ll have to pay the 25% withdrawal fee if you transfer to a different type of ISA before the age of 60. This does not apply if you transfer to another Lifetime ISA with a different provider.

How long does it take to transfer a Lifetime ISA?

Estimates suggest that it could take as little as 30 calendar days to transfer a Lifetime ISA. It could also take up to eight weeks if you have invested money in the account, and up to 12 weeks if you have foreign holdings.

Innovative Finance ISA

An Innovative Finance ISA allows you to loan your money to individuals or businesses who are looking to borrow in return for interest payments.

These interest payments will be entirely free from Income Tax and Capital Gains Tax.

However, you need to bear in mind that whoever you’re loaning money to may become unable to pay it back. That means Innovative Finance ISAs do come with an additional risk of losing money.

Innovative Finance ISAs are highly complex products and so are generally only suitable for experienced or institutional investors.

Transferring an Innovative Finance ISA

While you can transfer cash from an Innovative Finance ISA to a new provider, you may not be able to transfer other investments.

This is because Innovative Finance ISAs are complex and not all providers will accept them. Check with your new provider before you make this decision.

How long does it take to transfer an Innovative Finance ISA?

As Innovative Finance ISAs are a specialised type of product, it’s best to ask your provider how long this transfer will take.

Junior ISAs

A Junior ISA, also known as a “JISA”, is a type of ISA held in the name of a child. There are both Cash Junior ISAs and Stocks and Shares Junior ISAs.

Junior ISAs have an entirely separate annual ISA allowance, which in the 2021/22 tax year is £9,000. You can use the entire allowance on one type of JISA, or you can split it across the two types as you wish.

Transferring a Junior ISA

A Junior Cash ISA is generally a straightforward transfer, simply moving cash within the ISA wrapper to another provider.

Of course, as a Junior Stocks and Shares ISA contains investments, these will be treated in the same way as an adult Stocks and Shares ISA. That means your provider will either need to sell investments or make an “in specie” transfer.

How long does it take to transfer a Junior ISA?

It will typically take up to 15 days to transfer a Junior Cash ISA. Meanwhile, depending on the holdings in the account and how your provider makes their transfer, it could take between six and 12 weeks to transfer a Junior Stock and Shares ISA.

Pros and cons of an ISA transfer

Pros

• Keep your funds within the ISA wrapper

Making an ISA transfer ensures that the funds you want to move remain within the ISA wrapper, meaning your money retains its tax-efficient status.

If you chose to withdraw funds from your ISA to then put into another account instead of an ISA transfer, this would mean you would use up additional ISA allowance unnecessarily.

Even worse, if your ISA was now worth more than the ISA allowance itself, you wouldn’t be able to withdraw and move it to a different provider all in one go.

Meanwhile, making an ISA transfer ensures that you can move any value in your ISA while keeping any of your remaining allowance. That means you can continue saving and investing tax-efficiently.

• Better rates or fees

A different provider may be able to offer better interest rates for your Cash ISA or more cost-efficient fees for your Stocks and Shares ISA. Shop around to see whether you can find a better deal to help you make the most of your ISA.

• A bigger range of investment options

One reason that you may wish to switch to a different provider’s ISA is that they offer a greater range of investment options.

For example, Freetrade just added German stocks to their offerings, with the platform hoping to add even more countries to their roster in the near future. That might make them a more attractive option than your current provider, who may not be able to offer such a wide variety of stocks and shares.

So, you may simply want to switch because a different platform offers all the investments you’re interested in.

• Better customer or user experience

Sometimes, an ISA transfer can simply come down to finding a better customer or user experience.

Your current provider may have disappointed you with some poor customer service. Or perhaps you find their website or app difficult or confusing to navigate.

Another ISA provider may be able to give you a superior experience, offering better customer communications or a sleeker, intuitive app that makes managing your money even easier.

This may not seem like a big priority, but it can make all the difference to your experience of that provider.

• You can switch to a different account with the same provider

Something to bear in mind when it comes to ISA transfers is that you don’t necessarily have to switch providers to get what it is that you’re looking for.

For example, if you wanted to invest your money rather than holding it exclusively in cash, you may decide you want to switch from a Cash ISA to a Stocks and shares ISA.

So, if your current provider already offers both of these accounts, you could simply make a transfer between these two. This could be a faster and more cost-efficient process, giving you the benefits of switching with less hassle.

Cons

• You must meet the ISA transfer rules

Before you make an ISA transfer, the first thing you must do is check that you’re complying with the ISA transfer rules from both providers.

This could include basic points such as correctly filling out the transfer form with accurate details. It could also include specialised rules for Lifetime or Innovative Finance ISAs.

Check with your provider to make sure your transfer is within the rules.

• Could be costly

A major downside to transferring your ISA is the potential for there to be costs associated with your transfer.

For example, your current provider may charge exit fees to move your assets to a different provider as a deterrent to you moving. These charges may mean it isn’t worth your while to make your transfer.

On the other hand, it could even be less cost-efficient than you think to move to a new provider, too. While their flat rate for their ISA may be cheaper, they may have a percentage-based charge on all your investments.

Make sure you factor in all these costs before you make your move.

• You may only be able to make a cash transfer

If you’re moving a Stocks and Shares ISA, there’s a chance that your current provider will need to liquidate your investments so that they can move them to your new provider in cash form.

The downside to you here is that this may mean selling your investments for less than they were worth when you bought them. There’s a chance the value could rise in the meantime, too, so you could end up having to buy them back for a higher price.

You may also miss out on valuable investment returns during the period when your investments are no longer in the market.

Some providers will allow you to do what’s known as an “in specie” transfer, meaning your assets are moved as investments. However, if they can only do cash transfers, this could see you lose value on your investments.

Risks of ISA transfers

As with any big financial decision, there are risks that can come with an ISA transfer, the main one being that you inadvertently choose a fraudulent provider.

Fortunately, the Financial Conduct Authority (FCA) authorises and regulates many ISA providers in the UK. You can verify a firm’s identity and check the permissions that they have by going to the FCA website and searching the Financial Services Register.

Taking independent financial advice

If you’re unsure whether you should transfer your ISA, you may want to seek financial advice from a financial advisor.

A financial advisor can provide independent financial advice over whether this is the right choice for you. And, because they’re fully independent, you can be confident that the advice they’re giving you is free from any bias or financial incentive.

You can search for a financial advisor near you using the tool on our website.

Frequently asked questions

Please note

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.