As the end of the tax year approaches, a lot of people use this time to sit down and assess their financial situation. This could be everything from paying outstanding taxes to evaluating their existing ISAs. The latter leads many people to consider switching their ISA provider.
| 🛡️ Does transferring affect my ISA allowance? | No, it does not |
| ☠️ When transferring an ISA account, it’s important that? | Your new ISA provider has the type of ISA you want |
| ✈️ Can I transfer an ISA if I am abroad? | Yes, you can transfer an ISA to another provider if you are not a UK resident |
| 👮 Reasons to transfer an ISA? | •Account consolidation •Better performance •Level of service |
Whether it’s down to poor performance or a lack of expert guidance, people often switch towards the end of the tax year so that they can make use of any remaining ISA allowances and hit the ground running in the new financial year.
With that in mind, here is our comprehensive guide to some of the most frequently asked questions about ISA transfers.
What is an ISA transfer?
An ISA transfer is the process of moving the savings and investments held in one ISA account to another ISA account or moving from one ISA provider to another. Initiating an ISA transfer is worth doing if you want to take advantage of lower rates or consolidate your investment accounts.
How do I transfer an ISA?
Transferring an ISA is a deceptively straightforward process – that is to say, it’s incredibly easy. Initiating an ISA transfer can be as easy as requesting it from your new provider. You will be asked to fill out a short form, which is then signed and sent back to the new provider. From there, they will liaise with your current provider to make the transfer happen.
Other than building your portfolio with your new provider, this is the only administrative step you need to take to move your ISA to greener pastures. You can find all the information on transferring an existing ISA to Moneyfarm on our ISA Transfer page.
Does transferring affect my ISA allowance?
Absolutely not. Transferring an ISA to another provider will have no impact all on your allowance for that tax year (or beyond). The £20,000 limit is consistent across all providers and part of the transfer process includes sending your contribution history.
This means that your ISA allowance will remain properly allocated to the correct tax year and you won’t lose any of it by moving. For more information on ISA allowances and how they work, check out our full ISA guide for 2023.
Is there a limit to how much I can transfer?
The short answer here is no, there are no limits to the size of ISA you can transfer in any given tax year. Whether your ISA holds £15,000 or £150,000, you will be able to transfer it to a new provider with ease.
The only caveat to this is that, if you’re transferring an ISA with contributions made in that tax year, you have to transfer the whole amount. This is essentially to stop you from contributing to two separate ISAs of the same type within the same tax year. This shouldn’t be a problem for most people – it’s beneficial to have your ISA in one place anyway.
How long does an ISA transfer take?
The type of ISA transfer determines how long it will take. Cash ISA transfers should be processed within 15 working days, while it takes at most 30 days to transfer other types of ISAs.
ISA flexibility
You should check with your current ISA providers to see if their ISAs are flexible. With flexible ISAs, you can withdraw funds from them at any time during the tax year without affecting your annual ISA allowance. However, not all ISAs are flexible and always check the flexible ISA rules.
You can take out money from a cash ISA and put it back into a stocks and shares ISA. Once you take out money from a flexible ISA, please be aware that you have till the end of the same tax year to put back the money without affecting your ISA allowance. Please check the transfer restrictions of each individual ISA provider before opening an ISA account.
What happens to my ISA if I move abroad?
Legally, you can only open and fund an ISA if you are a UK resident (or if you are a Crown servant), and as many as you like. This means that if you move away, you will no longer be able to fund that ISA or open any new ones.
You can, however, hold onto any existing ISAs and continue to benefit from their tax-beneficial status. Ultimately, there is no sudden liability for income or capital gains tax on your ISA just because you’ve moved abroad. There is a chance that the country you move to will require you to pay tax on the returns there – this is worth checking before you move. You should also inform your ISA provider; some prefer you to close your accounts before moving.
How you think about this depends on how long you plan to live abroad for. If you are moving abroad temporarily for work, for example, it can make sense to leave the ISA open so you can continue to access it upon your return. If the move is permanent, it may be preferable to close the account completely and invest domestically in your new country of residence.
Either way, you can continue to transfer any ISAs you already hold between providers regardless of whether you live in the UK or elsewhere.
Why should I transfer my ISA?
There are a few key reasons you might want to transfer an existing ISA between providers. These include (but are not limited to):
- Performance: Put simply, if your ISA isn’t performing, it might be time to move it. Keep an eye on the performance of your provider relative to its peers and regularly weigh up whether better returns could be found elsewhere.
- Service. Not all wealth managers offer the same level of service. Whether you want more guidance, a more accessible digital platform, or just a more transparent service, there are plenty of reasons you could be happier with a new provider.
- Consolidation. Having multiple ISAs may feel like personal diversification, but it comes with a number of drawbacks. Having your ISAs in one place can help you take advantage of lower percentage fees as your account grows (with some providers). It’s also easier to keep track of your progress with everything under one roof.
With Moneyfarm, your ISA can be split into different pots so that each pot is at an appropriate risk level for your different financial goals. We’re proud of our strong performance and we combine tech and human expertise to offer a platform for investors of any level and with any medium or long term goals. For everything you need to know about the Moneyfarm ISA, check out our ISA page.
FAQ
Can I transfer ISA to another ISA?
Yes, you can transfer your ISA account from one provider to another at any time. In addition, you can transfer investments held in one type of ISA to a different type of ISA or the same type of ISA. For example, you can transfer a cash ISA to a stocks and shares ISA. However, there are ISA transfer rules and limitations, and each type of ISA and ISA provider may have restrictions.
What happens when I transfer a cash ISA to a stocks and shares ISA
If you transfer a cash ISA to a stocks and shares ISA, the funds in the cash ISA will be invested in the stock market, so you have to be comfortable with investing your money. Moneyfarm has tailored portfolios based on investment risk, and the robo-advisor option is available.
Does transferring an ISA affect your allowance?
An ISA transfer will not affect your current ISA allowance even if you are transferring ISAs from previous years, as it does not count as a withdrawal. However, an ISA transfer will count towards your lifetime ISA allowance.
