If you are a UK resident, ISA is a great way of growing your savings free of income and capital gains tax. At some point, you might want to transfer your ISA into a different type of ISA, or you might want to transfer your savings to a provider that offers a wider range of funds or lower costs.
These are some of the basics you need to know about transferring your ISA.
- You can transfer your cash ISA from one provider to another at any time
- You can transfer your savings to a different type of ISA account or to the same type of ISA
- If you want to transfer the money you’ve invested in an ISA during the current tax year, running until April 5, you must transfer all of it
- As for the savings you invested in previous years, you can choose to transfer all of it or just part of your money
- Transfers can be done within two weeks, but in certain cases, it can take up to a month
Check out our recommendations on the best brokers offering stocks and shares ISAs.
Here, we collected the top 5 things you need to know about how to transfer your Individual Savings Account (ISA)! Let's dive in!
1. What are the restrictions on ISA transfers?
If you transfer funds from a Lifetime ISA to a different ISA before the age of 60, you’ll have to pay a withdrawal fee of 25%. You can transfer cash from your Innovative Finance ISA to another provider but you may not be able to transfer other investments (i.e. peer-to-peer loans) from it.
Check with your provider for any restrictions, or charges they may have on transferring ISAs.
2. What if I want to switch ISA providers?
There could be various reasons why you might want to make an ISA transfer: you might want to change to a provider which offers more products or to reduce your investment costs.
In order not to lose the tax advantages for that year, you should initiate the transfer through the new provider. Don’t withdraw your ISA savings in order to transfer them because you will lose the tax benefits. Before starting the procedure, check with your current provider, they might have restrictions or make you pay a charge.
In case you want to change your provider, contact the ISA provider you want to move to and fill out an ISA transfer form. Do some research, providers are not obliged to accept your transfer, and some providers might charge a fee if you want to transfer a fixed-term ISA.
3. How long will ISA transfers take?
ISA transfers should not take longer than 15 working days for transfer between cash ISAs, and 30 calendar days for other types of transfers, according to UK government regulations. Make sure to ask your provider how long the transfer will take exactly.
4. Can I transfer an ISA to a family member?
You cannot transfer your ISA to another person because the tax benefits are for individuals and cannot be transferred or shared. If you want to move money from an ISA to another person, you will need to sell the investments, withdraw the money and give the money to the person.
5. Can I still transfer my ISA if I’m not a UK resident?
If you open an ISA in the UK and then move abroad, you cannot put money into it after the tax year that you move. You should tell your ISA provider if you are no longer a UK resident.
However, you can keep your ISA open and you’ll still get UK tax relief on money and investments held in it. You can also transfer an ISA to another provider even if you are not a UK resident. You can pay into your ISA again if you return and become a UK resident.
Let’s recap: what is an ISA?
As a UK resident, you can start saving money in a tax-free Individual Savings Account (ISA) account. In one tax year, which runs through April 5, you can save up to £20,000 on one or more types of ISAs. This sum is called the ISA allowance. If you don’t max out in a single tax year, you cannot roll it over to the following year.
The key is that you don't pay tax on:
- interest on cash in an ISA
- income or capital gains from investments in an ISA.
There are different types of ISAs, and you can learn about them here in our detailed article. Keep in mind that you can’t open multiple ISA accounts in a single tax year, but you can split the £20,000 annual allowance to several ISAs. For further details, check out our detailed guide on ISAs!
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