A Guide to Transferring ISAs
If you have ISAs which are no longer performing, you may be wise to consider making a transfer to another provider or bank.
Idle cash ISAs could be wasting your tax advantage if they have stopped paying the rates of interest you got when signing up.
Having capital invested in underperforming or outdated market sectors through investment ISAs, is a missed opportunity for the tax-free compound growth you could be getting if you were invested elsewhere.
This guide covers everything you need to know about transferring ISAs.
Can ISAs be transferred?
You can transfer your ISA at any time. If you want to transfer an ISA which you signed up to in the current tax year you must transfer the full amount. If, however, you have ISAs from previous tax years you can move the whole sum, or split it and move only a portion of it to the new ISA.
The key points to bear in mind with ISA transfers are:
- Make sure you go through the proper channels to make a transfer, otherwise you risk losing significant tax advantages
- You can transfer cash ISAs into investment ISAs and vice versa
- If you cash in your ISA, you’re only allowed to reinvest your money into another ISA if you have an unused ISA allowance for the current tax year
- Transferring cash ISAs takes up to 15 working days, but some providers start paying interest before the transaction is complete
- Transferring an investment ISA or switching from cash to stocks and shares can take up to 30 days working days to complete
Why transfer an investment ISA?
Transferring an investment ISA can make a significant difference to the returns you are seeing from your money. If your investment ISA is underperforming and subject to high management fees, transferring to a new arrangement might be the most sensible option. Reasons you may wish to consider transferring one or many investment ISAs might include:
- Gaining better returns through a well-managed fund
- To benefit from lower management fees
- To keep all your ISAs in one place, rather than dealing with multiple providers
- If your current provider doesn’t deliver decent customer service or online facilities, you may get from better service through a new provider
How to transfer your investment ISA
It’s important to follow the proper channels to transfer your stocks and shares ISAs. The process is simple, and shouldn’t prove too time-consuming, once you know where you want to invest your money…
- Set up an ISA account with the new provider and tell them you want to make a transfer. You shouldn’t have to make a deposit to open your new account.
- Complete an ISA transfer form. This will require information about the ISAs you want to transfer. If it is an ISA from a previous year you will need to specify whether you wish to transfer all of it or or only a percentage.
- Now wait. Your new ISA provider will take care of the transfer on your behalf and notify you once it’s complete. This should be done within 30 days of your initial transfer request.
- Review your investments. If you’ve consolidated multiple ISAs from previous tax years, you may find other offers or interesting investment opportunities through your new provider.
The above steps are the easiest and safest way to transact an investment ISA transfer. While it is also possible to sell all or some of your holdings first and transfer a cash value, this should not be done without soliciting advice from an expert investment advisor first as you risk losing out on valuable tax advantages.
We work with expert investment advisors who can help you understand all your investment decisions and help with all aspects of your financial planning. Get in touch with your questions and let them help you make the very most of your investments.
What are the best rates for an ISA transfer?
Investment ISA providers compete by promoting their best performing funds and the rates they have achieved for their customers in the past. The best rates come from fund managers with a wealth of experience and knowledge of markets, often within a particular industry sector. Knowing which provider and which fund manager will do the best job can take specialist knowledge.
The other thing which will have an impact on the best achievable rates is how long you intend to remain invested and your attitude to risk. There are funds available for investors who want to invest without putting their capital into high risk investments.
You can see good returns on these ‘safer’ funds, while the best rates on this type of fund are unlikely to out-perform funds with a more adventurous approach to risk, you will most likely benefit from steady performance and better returns than you would gain from holding cash.
Keep an eye out for the charges
High management fees can have an impact on the gains you could see on your investment. So, as well as doing your checks on the fund manager, you need to check the fine print to see how much the annual management fee is. Often this fee will work on a sliding scale, if you’re transferring multiple ISAs into one fund you could benefit from lower annual fees.
The experts we work with are experienced investment advisors and know how much fund management can impact your long term financial planning. Get in touch for a free, no-obligation chat and they will advise you of the funds you could consider based on your circumstances and your attitude to risk.
For the best returns, invest for the long term. If you can’t afford to tie your capital up for at least three years, you should probably look for a bond with a two or three-year fixed rate. Alternatively, you could use a cash ISA which offers total flexibility and accessibility.
Why transfer a cash ISA?
There are a few good reasons you may want to consider transferring your cash ISA:
- A better interest rate
- To have your money in one easy-to-manage account
- To spread risk by diversifying into different kinds of ISA
Cash ISAs let you transfer your money to a different bank or provider but you need to check you won’t incur penalties for doing so. For example, if you have a fixed rate ISA you may have a tied-in period. You could lose out on interest by transferring your funds before a certain date.
It’s also important to ensure the ISA you want to transfer to allows transfers in as not all cash ISAs allow this.
How to transfer ISAs between banks
Transferring your cash ISA is quick and easy to do, once you have decided the best home for your money. Follow these 4 simple steps to move your ISA to a new provider:
- Find the best cash ISAs which allow you to transfer ISAs from previous tax years
- Open a new ISA account at the bank you have chosen
- Fill out an ISA transfer form which you will be able to get from the new bank or building society, or find the provider’s form online
- Now wait for your new bank and previous ISA provider to arrange the transfer on your behalf
Once your completed transfer form is with the new provider you don’t need to do anything else. You should have your new cash ISA set up within 15 working days. Some cash ISAs will pay interest on the money you’re transferring straight away, even before the ISA transfer is complete.
How to find the best interest rates for ISA transfers
You will usually find the highest interest rates by opting for a fixed-rate cash ISA. The longer you’re willing to tie up your money, the higher the rates will be. Be sure you won’t need to withdraw early as you’ll be penalised and could lose out on all or some of the interest you would have earned on your savings.
If you are happy to tie up your money for five years or longer you’re likely to get better returns by investing in a stocks and shares ISA. Ask an advisor to confirm this. These can feel daunting if you are unfamiliar with investment products but there are providers who offer funds for people who wish to invest cautiously so it may be worth investigating your options.
We work with investment experts who understand the market inside out and can help you find an investment ISA which delivers great returns, without exposing your capital to too much risk. Naturally, if you invest in stocks and shares, your investment could go down as well as up but, over the medium to long term, investment ISAs usually return better rates than you will find by sticking in cash.
Get in touch for a free, no-obligation chat and we’ll connect you with one of the independent financial advisers we work with. They will be happy to answer your questions and introduce you to investment products which might suit your needs, circumstances and appetite for risk.
Transferring ISAs from previous years
An ISA wrapper allows your savings and investments to grow free from income tax and capital gains tax. If your existing ISAs aren’t in the best performing investment funds or are getting less interest than you could get elsewhere, an ISA transfer could be the best way to make sure you’re exposing your money to the best potential long term growth. Speak to an expert to find out what alternatives are available.
Transferring mature ISAs
If you have multiple ISAs, it’s possible to transfer all or part of your savings to another provider. It’s also possible to transfer your mature stocks and shares ISAs to a cash ISA which might be helpful if you’ve been using ISAs for a significant number of years and have built up funds in preparation for your retirement.
Transferring multiple ISAs from investment to cash ISAs can be a sensible move if you want to protect the money you have from market fluctuations when you are close to retiring. You may not want to transfer the whole amount at once, but it is possible to transfer funds out of an investment and into cash as and when you feel it necessary.
If this is something which you feel might be appropriate for you, talk to one of the expert advisors we work with. They will be able to give you advice about how the stock market is currently performing and help you plan for the income you need to enjoy a comfortable retirement without risking your hard-earned capital.
If you have multiple cash ISAs from previous tax years, it’s also possible to transfer them all into one cash ISA with a better interest rate. This can be a good move if the interest rate on your current ISA(s) is a lot less than you could achieve at another bank.
Can you transfer ISAs in the same tax year?
You can transfer multiple ISAs in the same tax year. You can transfer all or part of your ISA savings at any time. If you decide to transfer an ISA which you have invested in during the current tax year you must transfer the whole amount.
How many ISAs can you transfer?
You can transfer as many ISAs as you want, at any time. All ISAs allow transfers out but they don’t always allow transfers in. So, before you commit to making a change, make sure the ISA you want to move to will accept transfers in. Again, it’s super important not to try and make the transfer yourself.
You need to go through the proper channels so you don’t lose the ISA status on your savings or investment. If you cash in your ISA and try and reinvest it in a new ISA, you may find this won’t work and you can’t put your money back once you’ve taken it out.
If you want to get help making an ISA transfer and ensure you’re making the best decision for your particular circumstances, talk to one of the investment experts we work with.
Can I transfer multiple ISAs into one?
Yes. If you hold multiple ISAs, making a move to put all your ISAs into one can make it much easier manage your savings. In particular, if you have much older cash ISAs, you may not be earning much interest, by moving your money into an ISA account with a better rate of interest your money can continue to grow.
If you have multiple investment ISAs it’s also possible to transfer all of them into one place. However, with investment ISAs it’s important to make sure you’re spreading the risk.
If you want to consolidate your investments to make them easy to manage, you should seek advice before going ahead to ensure you move your ISA holdings to a fund which incorporates a variety of different investment holdings.
Get in touch for a free, no-obligation chat with one of the expert independent financial advisers we work with.
Is switching between ISAs recommended?
If you hold cash ISAs it may be in your best interest to keep abreast of interest rates and switch between accounts if your ISA is failing to pay competitive rates. There’s little point in holding a cash ISA which is failing to accumulate tax-free interest. As for investment ISAs, you should consider carefully before making a commitment to transfer.
Investment ISAs should be considered long term investments. If you transfer too often, you could find you miss out on growth by not remaining invested in the same fund long enough. On top of that, transferring stocks and shares ISAs tends to come with fees, so switching between providers regularly could erode your capital too.
You might want to look for another home for your investment if:
- The fund is underperforming
- There has been a change in fund manager and the new manager has less experience
- The annual management fees are excessive
Depending on the kind of stocks and shares ISA you hold and provider rules, it may be possible to transfer your investment to a new fund with the same provider without incurring fees. If you are happy with your current ISA provider and simply want to change the fund you are invested in, talk to your ISA provider to see if this is a service they offer.
If you are looking for a brand new investment for your ISA savings, get in touch and talk to one of the expert advisors we work with.
Speak to an expert
If you have accumulated many separate ISAs over the course of the years and want to consolidate them into one easy-to-manage investment the investment experts we work with can help.
With years of experience and a deep understanding of stocks and shares ISAs and the various funds and products available, they can use their knowledge to help you find the right investment for your money.
They will be happy to answer your questions and will take your needs, circumstances and attitude to risk into account when making their recommendations.
Call 0808 189 0463 or make an online enquiry for a free, no-obligation chat.