Does an ISA transfer count towards my annual allowance?

Full answer

Moving money between ISA providers through an official ISA transfer does not count towards your £20,000 annual ISA allowance, which is an important point that confuses many savers. The annual allowance only limits how much new money you pay in during the current tax year. If you saved £20,000 in previous years and transfer that whole balance to a better-paying ISA, none of it touches this year's allowance, and you would still be free to add a fresh £20,000 this year on top. The key is to use the provider's formal transfer process rather than withdrawing the money yourself. If you withdraw cash from an ISA and then pay it back in, it loses its tax-free status and counts as a new contribution against your allowance, which can cause you to breach the £20,000 limit. A proper transfer keeps the money inside the ISA wrapper the whole time. There are rules about current-year money: if you want to transfer ISA money you have paid in during the current tax year, you must transfer all of it, not just part, although money from earlier years can be transferred in whole or in part. Transfers between cash ISAs are usually quick, while transfers involving stocks and shares ISAs can take a few weeks. For 2026/27 the overall annual allowance remains £20,000, with up to £4,000 of that able to go into a Lifetime ISA. Always ask the new provider to arrange the transfer so you do not accidentally lose the tax wrapper. Use an ISA calculator to see how much your transferred and new contributions could grow tax-free over time.

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More answers

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