If you're fed up with poor returns on your ISA or your teaser rate has just disappeared, it is possible to transfer to another provider. But you must follow the right procedure to ensure that your savings and investments don't lose their tax-free status.
Can I transfer my ISA to another provider
You can transfer your ISA at any time from one provider to another – but you must do it carefully. There are no limits to the number of transfers you can make in a tax year.
You need to transfer an ISA rather than shutting your ISA account down and opening a new account with a different provider because you will lose the tax-free status of the ISA. But remember you can only pay new ISA money into the current year's active cash ISA.
Why should I transfer my old cash ISA?
Long-standing cash ISAs can pay very low rates of interest, so you might be able to improve what you get on your account by switching to a better rate. It's worth checking to see if you can get a better rate elsewhere. Often cash ISAs may offer a good introductory teaser rate and then drop off to a low level, so it is worth checking if you can get a better deal.
You can also transfer between types of ISAs, for example, you can transfer from a cash ISA into a stocks and shares ISA that could potentially offer a better rate of return in the long-term. But you need to recognise that different ISA types come with different levels of risk, and you may not get your money back as the value of investments can go up or down. You will also have to pay charges on a stocks and shares ISA.
What kind of ISA transfers are allowed?
You can transfer:
- your ISA from one provider to another
- from one ISA to another with the same provider if they allow it
- different amounts or parts to as many providers as will accept the transfer
- your savings to a different type of ISA or the same type of ISA
- all or part of your savings from any previous tax year
- all of any money you have invested in an ISA during the current tax year
What can't you transfer?
There are some restrictions on transfers:
- you can't transfer just part of your ISA savings you have invested this tax year – it has to be the whole amount
- while you can transfer cash out of an Innovative Finance ISA, you might not be able to transfer other investments
Can I transfer my ISA into someone else in the family's name?
No, you can't transfer your ISA into someone else's name, for example your husband, wife or child. You would need to close the account and open a new account in their name. But if your spouse or civil partner dies you can inherit their ISA allowance.
Are there different rules for transfers from Lifetime ISAs?
Because of the way the bonus works for Lifetime ISAs, if you transfer to a different type of ISA before the age of 60, you will have to pay a withdrawal fee of 25% - the equivalent of paying back the lifetime bonus. But you can switch between Lifetime ISA providers without penalty.
Can I transfer into any ISA?
No, it is up to the provider whether or not they allow transfers in. And even if a provider will accept a transfer, some won't accept partial transfers. Many ISA best buy tables will show whether or not a provider is willing to accept transfers – but it is always sensible to check the small print.
You will need to find an ISA that accepts transfers from other providers and understand any rules that apply. For example, if you open a new ISA with a new provider, they may allow you to transfer other ISAs to them providing you do it within a month of opening the account. Other providers may have different rules, and you need to understand these fully before you go ahead.
Will I have to pay a penalty if I transfer my ISA?
Possibly. While all ISA providers must let you transfer if you want to, some may charge you a penalty – this is usually done in the form of a reduction of interest. This is most common on fixed term ISAs that haven't yet matured – reached the end of the term. For example, if you take out a 2-year fixed interest ISA and then want to move it when you have had it for only 18 months the provider may charge you a penalty for leaving early – and reduce the interest rate to say that of their 1-year fixed rate account.
It makes sense to only make the transfer if the new ISA will earn you more interest compared with your existing ISA plus the cost of any penalty.
How do I transfer my ISA?
All you will need to do is ask your new provider to organise it and complete an ISA transfer form with the
- provider's name and address
- account number and details of the ISAs you want to move
- how much you want to transfer
You'll also be asked for your name, address, date of birth and National Insurance number. Your new provider will contact your old provider on your behalf and sort it out.
If you have a stocks and shares ISA, consider how you want to move your investments. You could arrange a cash transfer where your old provider sells your assets and transfers the cash over, or you might be able to transfer over all the assets, shares or funds themselves. This might carry additional costs. And don't forget, you won't be able to sell during the transfer, no matter what happens in the market.
How long will the ISA transfer take?
ISA transfers should take no longer than:
- 15 working days for a cash ISA and a cash Lifetime ISA
- 30 working days for a stocks and shares ISA, investments held in an innovative finance ISA and stocks and shares in a Lifetime ISA
If it takes longer than this then contact your ISA provider. If you are still unhappy then you may want to get in touch with the Ombudsman about the service you have received.
When should I transfer my ISA?
You can transfer your ISA when you choose, it doesn't have to be at the end of a tax year. But you may want to take account of any fixed rates coming to an end on a cash ISA and wait until the end of the term before moving your money to avoid any penalties.
What happens to any interest on a cash ISA during the transfer period?
Interest should be back-dated to the 16th day of the ISA transfer request, or from the day the original ISA was closed or stopped paying interest. This means that you should always earn interest throughout the transfer period, thanks to an Office of Fair Trading ruling in 2009. But it's always worth asking your new provider whether they start paying interest from the day they receive the transfer request for a cash ISA.