5 Frequently Asked Questions About ISA Transfers

The ability to rebalance your ISA portfolio is a crucial one. This is because things change. Whether that's the interest rates offered on specific ISA products, or your personal saving and investment goals – it's important that you're able to adjust your portfolio when required.

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Often misunderstood and overlooked, ISA transfers are incredibly useful in this scenario, allowing you to move funds from one ISA to another without affecting your annual ISA allowance. 

We have answered five frequently asked questions regarding ISA transfers to give you a better understanding of what they are, how they can be beneficial and their core rules.


1. Does an ISA transfer count towards my ISA allowance?

No, an ISA transfer does not count towards your ISA allowance. As a result, when completed correctly, an ISA transfer can allow you to save or invest what could be considerably more than the £20,000 annual ISA allowance each tax year. 

For example, if an investor subscribed their full £20,000 allowance to a Stocks and Shares ISA in 2021/22 but decided to alter the weighting of their portfolio in 2022/23 by transferring £10,000 of this to an Innovative Finance ISA (IFISA), they would still have their full £20,000 allowance for 2022/23, thus technically being able to invest £30,000 into an ISA in one tax year.


2. What is the benefit in transferring an ISA?

Circumstances change, whether that’s changing saving or investment goals or wider market changes affecting an ISA product’s ability to cater to your goals. This is where transferring an ISA can be beneficial, making it relatively simple to move your already-subscribed funds to an ISA better suited to your needs. 

As an example, Investor One has £60,000 saved in a Cash ISA accumulated over previous tax years. However, they’re now willing and able to take more risk in search of higher target returns, and they therefore transfer £10,000 to a Stocks and Shares ISA and £10,000 to an IFISA

Moreover, Investor Two has £40,000 in a Stocks and Shares ISA accumulated over previous tax years, but is feeling disillusioned with the volatility of the equities market and would like to incorporate alternative investments into their portfolio. Therefore, they transfer £20,000 to an IFISA. 

In these scenarios, utilising ISA transfers is enabling both investors to reduce exposure to assets that are no longer – or to a lesser degree – working for them, all without having to subscribe any of their current ISA allowance.


3. How does an ISA transfer work?

It’s incredibly important that you have a good understanding of how the ISA transfer process works before going ahead with a transfer, as getting this wrong could affect the tax-free status of your funds.

You should not attempt to transfer from one ISA to another by withdrawing and re-subscribing your funds as once funds are withdrawn from an ISA they lose their tax-free status and the amount would be deducted from your current year’s ISA allowance when re-subscribing. 

Instead, an ISA transfer authority form must be completed and submitted to your current ISA provider so they are aware you wish to transfer your funds to another provider and can initiate the process. To start the process and complete the transfer authority form, you will typically go through the provider you wish to transfer to, and it can usually be completed online, though this will differ from provider-to-provider. 

Once you have completed the transfer authority form and it has been received by your current ISA provider, it can take between 15 and 30 days for the transfer to take place, however your ISA provider should be able to give you a better estimate based on their specific timeframe.


4. What are the main ISA transfer rules?

Aside from following the official ISA transfer process, there are several important ISA transfer rules and features to be aware of. 

1. You can transfer as much as you wish from within your ISA products as ISA transfers are not governed by the annual ISA allowance. 

2. At present, when transferring funds invested into an ISA in the current tax year, you must transfer all of them. However from 6th April 2024, you will be able to partially transfer funds subscribed in the current tax year in the same way that you are able to when transferring funds subscribed in a previous tax year (as detailed below). 

3. When transferring funds invested into an ISA in a previous tax year, you can either transfer it in full or only transfer part of it. This means that if you had £50,000 in an ISA that was subscribed in a previous year, you could choose to transfer the full amount or just a portion of it. 

4. There is no limit to the amount of times you can transfer an ISA or to the number of ISA transfers you make - you can transfer ISAs as many times as you wish.


5. Can all ISA products be transferred?

Though you can technically transfer any ISA product, the rules and intricacies are more complex for some than others. 

Firstly, with regards to a Junior ISA, you can only transfer to another Junior ISA with another provider – you can not transfer from a Junior ISA to and Adult ISA. 

It’s also important to be aware that if you wish to transfer a fixed-term ISA before the term ends, you may be required to pay a fee, and some providers may not allow you to do so at all. 

When considering the transfer of a Stocks and Shares ISA, the process is somewhat different to that of other ISA products. If you would like to transfer a Stocks and Shares ISA to another Stocks and Shares ISA, you can either do an in-specie transfer, or a cash transfer.

The former means the investments held in your current Stocks and Shares ISA are retained, and simply passed over to your new provider. You stay invested throughout the process.

The latter means the investments held in your current Stocks and Shares ISA are sold, and the proceeds are then transferred to your new provider to reinvest as per your instructions.

If you wish to transfer a Stocks and Shares ISA to a Cash ISA, IFISA or Lifetime ISA, your investments must be sold before transferring as they are unable to hold stocks and shares.


Utilising ISA transfers to boost your ISA portfolio

Over 20 years after its introduction, the ISA remains one of the most generous tax incentives available to investors in the UK, and it’s therefore important to ensure you are always using it to its maximum. 

The utilisation of ISA transfers when needed is an excellent example of doing so. They aid in altering the weighting of your ISA portfolio to ensure you are always getting what you need from your ISA products and that your past ISA allowances continue to work their hardest to meet your goals.



Originally published September 2022, updated March 2024.