The complete guide to ISA transfers

The ISA is one of the most generous tax wrappers currently available to UK savers and investors.

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Allowing you to at-present contribute up to £20,000 tax-free each year across a range of products, there are a number of intricacies surrounding ISAs that many aren’t aware of – with ISA transfers being a perfect example. 

Completed correctly, an ISA transfer can allow you to save or invest what could be considerably more than your £20,000 annual ISA allowance each tax year.

Arguably one of the most under-utilised yet extremely beneficial aspects of the ISA, understanding how ISA transfers work and their potential benefits can be key to making the most of your ISA contributions.


Why would I need to transfer an ISA?

There are several reasons an ISA transfer may be required. This includes the desire to transfer to the same type of ISA with a different provider for a better rate, or to transfer to a different ISA product altogether. 

As it nears the end of the tax year, most investors will assess their ISA portfolios, looking to determine whether their all-important saving and investment goals are being met. 

Investors with the aim of growing their capital may feel disillusioned with the low Cash ISA interest rates on offer, as sitting in a Cash ISA, its value could actually be decreasing. Therefore, as long as the investor is willing and able to take more risks, transferring into an Innovative Finance ISA (IFISA) or a Stocks and Shares ISA could be an important consideration. 

Or, for cautious investors who do not want to lose the security that comes with a Cash ISA, shopping around for the best rates and making a transfer when a more lucrative option appears is crucial.

Read more:what is the best ISA to transfer into?

On the other hand, investors holding a Stocks and Shares ISA could feel discouraged by the volatile nature of the stock market, opting to transfer into an IFISA – an investment product with a similar risk–return profile and target interest rates – instead. 


How does an ISA transfer work?

Although the ISA transfer process is complex from a providers perspective, it's generally simple and requires minimal input from the investor. To initiate an ISA transfer, an ISA transfer authority form must be completed and submitted to the current ISA provider, and many providers allow for this to be carried out digitally (from the provider to which you want to transfer to).

Please note: specific processes will differ on a provider-to-provider basis. You must contact your provider for detailed instructions.  

It is critical to understand you should not attempt to move funds from one ISA to another without following the official process. Withdrawing funds will remove them from the ISA wrapper and result in reinvestment being deducted from your current ISA allowance.

As well as this, be aware that not all ISA providers allow transfers in and some providers may require an exit fee to be paid when transferring out. These are generally apparent with Cash ISA providers where a fixed term was agreed to initially and hasn’t yet completed.


What are the main ISA transfer rules?

Whilst the process of transferring an ISA is a relatively simple one for the investor, there are some notable rules and considerations to keep in mind before doing so:

  • You can transfer as much as you wish (where possible), as transfers are not governed by the annual ISA allowance. This is one of the main benefits of an ISA transfer as it allows the flexible movement of funds in the event of a change to investment goals or discovery of better rates elsewhere without having a negative impact on the amount of allowance left to subscribe in the current tax year. 

  • If you want to transfer money invested into an ISA during the current tax year, you must transfer all of it. If you subscribed the full £20,000 ISA allowance to a Stocks and Shares ISA at the beginning of the tax year in April but decided you’d like to open an IFISA in May and transfer funds over, you would be required to transfer all £20,000.  

  • If you want to transfer money invested into an ISA in a previous year, you can choose to transfer all or only part of it. This means if you had £50,000 in a Cash ISA that had been deposited in previous tax years, you could choose how much of this you transfer to an alternative provider – it is not necessary to transfer it in full unless you wish to do so. 

  • You can transfer ISAs as many times as you like. There is no limit on the number of transfers you are allowed to make, whether that’s in one tax year, or over your lifetime.


Can I transfer a Stocks and Shares ISA?

It is possible to transfer a Stocks and Shares ISA, but there are some additional rules and processes involved when doing so.

If you are transferring from one Stocks and Shares ISA to another, 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.

You are also able to transfer from a Stocks and Shares ISA into a Cash ISA, IFISA or Lifetime ISA. However, as Cash ISAs, IFISAs and Cash Lifetime ISAs can not hold stocks and shares, your investments must be sold before transferring.


Can I transfer a Lifetime ISA?

You can transfer both into and out of a Lifetime ISA, but again, there are extra considerations involved.

Because the subscription limit for a Lifetime ISA is capped at £4,000 at present, this is the maximum amount that can be transferred into the account. Anything transferred above this will not be eligible for the Government bonus

In addition to this, if you choose to transfer out of a Lifetime ISA into another type of ISA before turning 60, a withdrawal fee of 25% will be payable – effectively removing any Government bonus received.


Do ISA transfers mean I save or invest more than the annual ISA allowance?

The simple answer to this is no – because ISA transfers do not contribute towards the annual ISA allowance, you can essentially invest up to the total value of your savings or investments held within your ISA wrapper.

And this is where the benefit of transferring your ISA becomes clear.

We know that withdrawing funds from an ISA should always be the last consideration, because when you do so, they immediately lose their tax-free status. This means you are effectively limited to investing £20,000 each and every tax year at present.

But an ISA transfer means you are able to move the entire amount from one ISA product to another, giving you the ability to – for example – change the risk–returns profile of your ISA portfolio. 

Use the example of having £100,000 in a Cash ISA, accrued over several years of contributing your entire ISA allowance, earning you 0.5% per annum. If you took the appropriate financial advice and decided you wished to target higher returns by adding a greater level of risk to your ISA portfolio, you could transfer the entire balance to a Stocks and Shares ISA or an IFISA.

Doing so would not only allow you to begin targeting a higher interest rate, but it would also mean you could also contribute any unused allowance from the current tax year, too - if you hadn’t used it at all, that could mean you have £120,000 now invested and targeting a greater rate of interest.

Importantly in this scenario, this is transferring from a Cash ISA – which is a savings product whereby your funds are protected under the terms of the Financial Services Compensation Scheme (FSCS) to an investment product where your capital is at risk and your returns aren’t guaranteed, but for the right experienced investors, it could be the right move for them.

Irrelevant of the scenario, though, remember: it is crucial that the official ISA transfer process is carried out for this to be the case. Do not withdraw funds and reinvest them manually as doing so will remove the capital’s tax-free status and the reinvestment will contribute towards the ISA allowance.


How long does an ISA transfer take?

This is dependent upon the provider and in some cases the kind of ISA being transferred. 

For example, the transfer of a Cash ISA to another Cash ISA is straightforward and will often take less time than the transfer of a Stocks and Shares to a Cash ISA or IFISA. This is because investments held in the Stocks and Shares ISA must be sold before the transfer takes place, as both a Cash ISA and an IFISA can not hold stocks and shares. 

As a guideline timeframe, between 15 and 30 days would be a reasonable expectation, but ask for clarification from your provider - in some instances, you may be eligible for compensation for loss of interest if a certain time period is surpassed.


Can I transfer an ISA to someone else?

No, it is not possible to transfer an ISA to someone else. In order to move funds from your ISA to one in someone else’s name, a withdrawal would be needed and they would then have to subscribe the funds to their ISA, which would contribute towards their annual ISA allowance. 


Can I transfer an ISA upon death?

In the event of the ISA holder’s death, ISA funds are moved to a spouse or civil partner. The funds retain their tax-free status and the spouse or civil partner is granted a temporary ISA allowance extension equal to the allowance at the time plus the amount transferred from the inherited ISA. 

However, if a spouse or civil partner is not the beneficiary of the ISA, the funds will be added to your estate. In this case, inheritance tax may be due if your estate is liable. 


Transferring an ISA

As an ISA saver or investor, it’s important to understand the process of transferring an ISA, and the benefits of doing so. 

There may come a time when one – or all – of your existing ISA products or providers no longer aligns with your financial requirements. With the natural step being to adjust your portfolio to better reflect your needs, being aware that an ISA transfer allows you to transfer your funds from one ISA product or provider to another without contributing towards the annual ISA allowance is key

On top of this, having clear comprehension of how an ISA transfer works, the main rules of an ISA transfer and how long an ISA transfer takes – among other things – will provide you with the right foundations to understand how to further benefit from your ISA savings and investments.



The CARLTON Bonds product is available exclusively to experienced investors who are classified as either sophisticated investors, high-net-worth individuals or professional investors and have the knowledge and experience to make their own investment decisions. Investments are high risk and illiquid, your capital is at risk and returns are not guaranteed. Bonds are not protected by the Financial Services Compensation Scheme (FSCS).