If you’re disappointed with the returns delivered by your current ISA, or if you have opened ISAs in previous tax years and forgotten about them, now could be a good time to give them a second lease of life by completing an ISA transfer.
Can any type of ISA be transferred?
Not only can you transfer any ISA you hold to a new provider, transfers can also occur between different types of ISAs. Let’s say you hold a Cash ISA, you could either choose to transfer it to another Cash ISA account, or it could be turned into an Investment ISA upon the transfer.
Why would you transfer an ISA?
There are many reasons why you could consider transferring your ISA. For instance, if you’ve opened multiple ISAs with various providers, transferring your old ISAs is a good way to tidy up your finances and makes it easier for you to manage your money because some providers will give you a dashboard, where you can see all your money in one place and control them all through one app.
If you’re transferring a Cash ISA to another provider, you could give your savings a boost if you were to find a provider offering higher interest rates, but keep in mind that some ISA products will have exit fees, so do your research and shop around!
If you’re holding an Investment ISA and choose to have your money looked after by investing experts, you would typically have to pay a fee. So, if you have several accounts opened with different providers, you could be paying a lot in fees. Transferring your Investment ISAs to one place could help you keep a tighter handle on any charges you’ve got to pay and consolidating with a single provider could help you get a cheaper fee rate.
Your money could potentially get a little push from transferring your Cash ISA to an Investment ISA. Indeed, with inflation outpacing most interest rates, the value of a Cash ISA might even decrease in real terms. Having enough money aside to cover unexpected expenses is essential but, if you’re pursuing long-term financial growth, investing could be a route to consider as long as you’re comfortable taking some risk. When you invest, the returns you can get aren’t tied to a fixed interest rate but rather are dependent on how much your investments are worth when you sell them. So, with investing, there’s a risk you could get back less than you initially put in, but there’s also a chance for inflation-beating gains.
How do ISA transfers work?
Transferring an ISA is easy and should take no longer than 15 working days for a Cash ISA and 30 working days for a Stocks and Shares ISA. Also, your new provider will typically do the hard work for you. Whilst transferring an ISA is straightforward, there are some rules you need to follow to ensure the tax-efficient status of your ISA is maintained.
If you’re moving an old ISA to a new provider, you can either transfer the balance in full or in part, and whatever option you go for, there’ll be no impact on your current ISA allowance. For example, if you’re transferring £7,000 from an ISA opened 2 years ago and haven’t used this year’s allowance yet, you’d still be able to put up to £20,000 in a new ISA.
If you’re transferring an ISA you’ve opened this year to another provider, you must transfer the full balance. Also, when you move your current ISA to a new place, it’ll count towards this year’s allowance. So, let’s imagine you’ve put £7,000 in an Investment ISA and want to transfer it to Wealthify. You’ll need to transfer the full amount (£7,000) and you’ll have £13,000 from your annual allowance left to use.
For every ISA transfer you complete, you must ALWAYS request the official ISA transfer form from the provider you’re transferring to and make sure you complete it to retain the tax benefits of your ISA.
If you want to know more about transferring an ISA to Wealthify, please get in touch, either by phone on 0800 802 1800, LiveChat, or send us a secure message.
The tax treatment depends on your individual circumstances and maybe subject to change in the future.
Please remember the value of your investments can go down as well as up, and you could get back less than invested.
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The comments and opinions expressed in this article are the author's own and should not be taken as financial advice from Wealthify.