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Derin Clark

Derin Clark

Online Reporter
Published: 24/03/2021
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With just weeks away until the end of the 2020/21 tax year, time is running out for those who have not yet used up their £20,000 tax-free allowance, which resets on 6 April 2021. Savers who have yet to open an ISA this tax year should check our ISA chart to see if they can grab a top rate before the year ends.

When moving money into a new ISA, it is important to transfer the funds to ensure that the tax-free allowance on the total deposit remains – here we’ve outlined why savers should transfer their ISA and how to do it.

Transfer rules quick guide

Transferring a cash ISA allows savers to move their savings into a higher-paying ISA without losing their tax-free allowance. It is important to remember that only one ISA can be opened each tax year, but savers can move funds between existing ISAs to help get the best rate possible.

Here is a quick overview of how to transfer a cash ISA. Savers who want extra detail should read our guide on how to transfer cash ISAs.

1. Start the process by comparing cash ISA rates, but make sure to check that the potential new ISA accepts transfers in, as not all do – this information can be found in the further details section on our chart. As well as this, check that the current ISA does not penalise for transferring out – fixed rate ISAs and notice ISAs will often charge interest penalties for doing so, but easy access ISAs normally do not have transfer out penalties.

2. Open the new ISA, but do not withdraw money from the old ISA. This is vital as taking money out of an ISA means that it instantly loses its tax-efficiency and results in savers only being able to deposit this year’s ISA allowance tax-free in the new account if it has not already been used up. This is particularly important to keep in mind for savers who have been building up a pot over several years, as they may have a hefty amount saved that would be liable to tax if the money was withdrawn.

3. Instead of withdrawing money from the old ISA, savers need to complete a cash ISA transfer form with the new bank or building society. This is all savers need to do as the new bank or building society will take care of the rest and will organise for the funds in the old ISA to be transferred to the new one.

ISA transfers are a quick and simple process that should be completed within 15 working days.

How to get the best ISA rate

Savers who have not yet opened an ISA for the 2020/21 tax year must do so before the 6 April 2021 if they want to take full advantage of their tax-free allowance for the year. Although ISA rates have been falling over the last 12 months and this year’s ISA season – a period in March and April when traditionally the best ISA rates are available – has been virtually non-existent this year, there are still above-average rates available in our ISA charts.

Long-term savers who are willing to take a risker option for the possibility of earning higher returns on their investment, may want to consider a stocks and shares ISA instead. Stocks and shares ISAs have the risk of investors not making any returns on their investment, as well as the possibility of losing some or all of their initial capital. This means that those considering this option should be prepared to lose the initial money they invest. In return for the risks, stocks and shares ISAs have the potential of enabling investors to earn higher returns than they would make on a cash ISA.

In addition to this, stocks and shares ISAs also have the £20,000 tax-free allowance for the tax year as cash ISAs. The tax-free allowance, however, remains at £20,000 for both cash and stocks and shares ISAs, meaning that it is not possible to invest £20,000 in a stocks and shares ISA and a further £20,000 in a cash ISA during the same tax year.

Investing in a stocks and shares ISA is easy to do, especially with the growth of investment platforms over the last decade. These platforms usually charge a fee but in return allow investors to choose from a range of shares, funds and bonds to make it easy to diversify their investment portfolio. More information about investment platforms can be found here.

In addition to allowing investors to choose from a range of investments, some investment platforms, such as Interactive Investor, allow ISA customers to transfer their funds to the stocks and shares ISAs, enabling them to retain their tax-free allowance.


Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time. Links to third parties on this page are paid for by the third party. You can find out more about the individual products by visiting their site. will receive a small payment if you use their services after you click through to their site. All information is subject to change without notice. Please check all terms before making any decisions. 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.

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