5 things Worth Knowing About ISA Transfers | moneyfacts.co.uk

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nigel woollsey

Nigel Woollsey

Online Writer
Published: 30/12/2019

At a glance

  • Transferring your ISA allows you to move your funds to a higher interest paying account, or a different type of ISA while retaining their tax-free status.
  • You can transfer funds between the different types of ISA.
  • Cash ISAs should transfer within 15 working days.

What is an ISA transfer?

This is the name used to move your ISA from one bank or building society to another. It can also apply when you move your ISA from one type to another, for example from a cash ISA into a stocks & shares ISA.

Using a transfer is important as this is the only way to retain the tax-free status of the funds. If you withdraw the money and then reinvest the funds, these would lose their tax-free status for previous tax years and would count as the current year’s ISA payments

Five things to know about ISA transfers

1. Never withdraw your money (unless you need the cash) – transfer your funds to retain their tax-free status

Don't just withdraw the money, close the account and reinvest the funds into another ISA – transferring is key. Withdrawing rather than transferring will mean you lose the tax-free advantages of that savings pot, and if you have several years' worth of ISA savings in cash (i.e. more than £20,000), you can't automatically put it all into a new ISA because of the annual limit. You MUST transfer the account itself or the funds held within it, otherwise you're effectively starting over.

2. You can transfer your ISA as many times as you like

The rule is that you're only allowed to pay into one of each type of ISA per tax year. However, you can transfer ISAs as often as you like – transfers don't technically count as paying in, so if you notice a better rate elsewhere, you can make a transfer whenever you wish. If you have a fixed or notice cash ISA, you should check if a transfer out will incur an interest penalty. It's also worth noting that you can transfer previous years' ISA savings to a better account AND open a new one for the current tax year at the same time – previous savings aren't governed by the "one ISA-type per person per year" rule

3. You can transfer as much as you like – the £20,000 limit is only for deposits made in the current tax year

You can transfer the current year's ISA subscriptions and/or all or part of the previous year's subscriptions to the new account – transfers aren't governed by the usual paying-in limit (currently £20,000), so you can transfer as much as you like. However, if the ISA only contains savings paid in during the current tax year, you must transfer the full account to the new provider, and bear in mind that not all providers allow partial transfers of previous years' savings.

4. Money held in one type of ISA can be transferred to another type of ISA – as long as the account accepts transfers in

Money held in a cash ISA can be transferred into another cash account or into a stocks & shares ISA, and likewise, assets held in a stocks & shares ISA can be switched back into cash should you wish (this may take more preparation than transferring cash ISAs, however, so make sure to speak to your provider). You can do the same with innovative finance ISAs and Lifetime ISAs, but the process may be trickier due to the specific rules and factors of these ISA types.

5. A cash ISA transfer is easy to do and should be completed within 15 days

It's simple to make the transfer – once you've done your research to find the best rate, and have made sure all applicable ISAs allow transfers, all you have to do is open the new account and complete a short transfer form with the new bank or building society. After that, it's all in the hands of the providers – they'll complete the transfer process and, for cash ISAs, will do so within 15 working days, and you'll be compensated for any lost interest if the process takes longer.

Why transfer a cash ISA?

Some reasons to transfer a cash ISA:

• To get a better rate.
• To bring your money together so it's easier to manage.
• To diversify into different types of ISA to spread risk.

All cash ISAs have to allow you to transfer your money to another provider. However, there may be a penalty for transferring out – particularly on fixed rate ISAs – and not all providers will let you transfer in previous ISA pots.

Moneyfacts tip

Moneyfacts tip nigel woollsey

Before transferring, be sure to weigh up whether you’ll earn more interest by moving (and paying any penalty) or staying put.

How to transfer a cash ISA

  • Research the best cash ISAs that allow transfers in (not all do). Our ISA savings search could be a great place to start.
  • Open the new ISA.
  • Complete a short ISA transfer form with the new bank or building society.
  • Your new and your old ISA providers will arrange for the ISA to be transferred.

Once you have completed the transfer form, you don't need to do a thing. Some ISA providers will pay you interest on the money you wish to transfer from day one.

How often can I transfer my ISA?

You can only have one active cash ISA per tax year (6 April to the following 5 April), but you'll be able to transfer ISAs as often as you wish – as long as you follow the correct process.

How long does it take to transfer an ISA?

ISA providers should complete the transfer of your ISA in 15 working days or less. If they fail to meet this then they should compensate you paying the interest rate offered by the new ISA provider.

Moneyfacts tip

Moneyfacts tip nigel woollsey

Do not close your existing ISA or withdraw the money. You must follow the specific ISA transfer process.

Can I transfer my ISA with my existing bank to another of their ISA products?

Some banks and building societies will only accept new money. This means that they will not let you transfer to another ISA in their range and will only allow transfers in from money you have saved with another provider.

Can I transfer from a Child Trust Fund to a Junior ISA?

Since April 2015, it has been possible to move your child’s money from a Child Trust Fund to a Junior ISA. After the Child Trust Fund scheme ended, the availability and rates for the cash version of these products were not as competitive as those available through cash Junior ISAs. As a result, the Government permitted the transfer of Child Trust Funds to Junior ISAs. For investment versions, savers should consider if there are charges to transfer out and compare the management fees between the two products.

Moving from a Child Trust Fund to a Junior ISA is a permanent choice, you cannot revert back once you have completed your transfer.

Five steps to transfer from a Child Trust Fund to a Junior ISA

  1. Check the Junior ISA accepts transfers in.
  2. Ask your new JISA provider for a transfer form.
  3. Complete the transfer form.
  4. The new Junior ISA provider will contact your Child Trust Fund provider to arrange the switch.
  5. In 15 to 30 days your transfer should be complete.

Are there any penalties for moving a Child Trust Fund to a Junior ISA?

While there are unlikely to be any charges for transferring from a cash Child Trust Fund, there may be a penalty to pay if switching from a stocks and shares Child Trust Fund. To be on the safe side, check with your existing Child Trust Fund provider first.
One thing you can be sure of is that the transfer of a CTF won’t be counted towards the tax-free limit of £9,000 per tax year (2021/2022).

Pros and cons of moving a Child Trust Fund to a Junior ISA

  • Larger range of products offering greater choice of attractive interest rates or investment options.
  • Generally, JISAs pay more interest than an old CTF (but do check).
  • Easy and simple to do, with just one form to complete.
  • A transfer won’t count toward the JISAs tax-free limit of £9,000 per annum.
  • A minority of JISAs do not allow transfers from CTFs.

Moneyfacts tip

Moneyfacts tip nigel woollsey

Shop around to gauge the best deals out there for Junior ISAs – there is a large range to choose from. But don’t feel you must transfer from a CTF – always check that you’d be better off under a new JISA.

Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

At a glance

  • Transferring your ISA allows you to move your funds to a higher interest paying account, or a different type of ISA while retaining their tax-free status.
  • You can transfer funds between the different types of ISA.
  • Cash ISAs should transfer within 15 working days.

Guide contents


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