Published: 28 March 2024
So, you’ve decided to take the plunge and transfer your ISA. Maybe you’ve found a better deal, want to consolidate your savings or just fancy a change. Making this move can be a smart financial decision – but before you dive in, let’s break down the ins and outs of ISA transfers.
ISA transfer rules
There are a few things to bear in mind when transferring an ISA.
1. Direct ISA transfers: You must transfer your ISA directly from one provider to another using their transfer service. This helps you stay tax-efficient* and ensures a smooth transition between accounts.
2. Types of ISAs you can transfer: Cash ISAs, Stocks and Shares ISAs, Innovative Finance ISAs and Lifetime ISAs can all be transferred. It’s up to you whether you transfer your money to the same type of ISA, or a different one.
3. Transferring all or some of your ISA: If you haven’t invested in your ISA this tax year, you have the option to transfer the entire balance or just part of it. Be aware that some providers may have minimum transfer amounts, or won’t allow transfers in at all, so check this before you start.
Does transferring an ISA count as opening a new one?
Nope, transferring your ISA doesn’t count as opening a new one. Instead, it’s more like giving your savings a change of scenery. The money stays within the ISA wrapper, preserving its tax-free** status, and you continue to build on your existing savings.
Can you transfer a fixed rate Cash ISA before maturity?
You can transfer a fixed rate Cash ISA before maturity, but there may be penalties involved. This type of ISA often comes with terms and conditions that lock your money away for a set period, often one to five years. If you choose to transfer before the term ends, you could face charges and/or lose out on interest. Always check with your provider to understand any implications before making a move.
How to transfer an ISA
1. Do your research: Start by researching potential new ISA providers to find the best deal for your needs. Look at interest rates, fees and any special offers or incentives. Also make sure the provider actually allows you to transfer in.
2. Contact your new provider: Once you’ve picked who you want to get your new ISA with, get in touch with them to start the transfer process. They’ll guide you through the steps you need to take and may give you a transfer form to fill out.
3. Complete the transfer form: Fill out the transfer form accurately, providing details of your existing ISA and the amount you want to transfer.
4. Wait patiently: Sit back and relax while your new provider talks to your old one to transfer the money over. This can take anywhere from a few days to a few weeks, depending on the providers involved and the type of ISA you’re transferring.
5. Confirm completion: Once the transfer is complete, you’ll get confirmation from your new provider. Make sure to check everything has been transferred correctly, including any interest or growth.
Does transferring an ISA use your allowance?
No, as long as you use the new provider’s transfer service, transferring your ISA doesn’t use up any of your ISA allowance for the current tax year. Your annual ISA allowance is the amount you can add to your ISA each tax year, and transferring existing savings between providers doesn’t affect this limit.
For the 2024/2025 tax year the ISA allowance is £20,000 per year.
How long does an ISA transfer take?
The time it takes to complete an ISA transfer can vary depending on several factors, including the providers involved, the type of ISA being transferred and any administrative delays. In general, transfers typically take between seven to 30 days to complete, although some may be processed more quickly or take longer. Be patient and keep in touch with both your old and new providers for updates on the transfer progress.
With these tips in mind, you’re hopefully now equipped to make informed decisions about moving your ISA savings between providers. Remember to weigh up the pros and cons of different ISAs, do your research on providers, and always seek advice if you’re unsure. Happy transferring!
*The tax treatment depends on the individual circumstances of each customer and may be subject to change in the future.
**Tax-free means that interest payable is exempt from income tax.
This guide is intended as a summary only and does not constitute legal or financial advice given by Leeds Building Society. No reliance should be placed on this guide. We recommend that you seek independent legal advice and/or financial advice if you have any questions or queries.
Cash ISAs are available to individuals aged 18 or over who are resident in the UK for tax purposes.
Deposits in any tax year are subject to the limits set by HM Revenue and Customs (HMRC) and may therefore be subject to change.
