How do ISA transfers work?

Full answer

ISA transfers allow you to move your savings or investments from one ISA provider to another while keeping the tax-free wrapper intact. The key rule is: **never withdraw your ISA money and reinvest it** — doing so permanently destroys the ISA status of the amount withdrawn (you lose that year's allowance if already used). **How to transfer correctly:** 1. Apply for the new ISA with your chosen provider and complete their **ISA transfer form** (they handle the request on your behalf). 2. The receiving provider contacts your existing provider to arrange the transfer. 3. You should not close the existing ISA yourself. **Transfer timescales (FCA rules):** - **Cash ISA transfers:** Must complete within **15 working days**. - **Stocks & Shares ISA transfers (in-cash):** Also 15 working days typically, though in-specie (asset) transfers can take longer. - **In-specie transfers:** Allow you to transfer investments without selling — useful for tax-efficient portfolios, but not all providers support them. **Current vs previous year ISAs:** - You can transfer both current-year and previous-year ISA money at any time. - Transferring current-year funds means the receiving provider takes on that year's subscription — you can still contribute the remainder of your £20,000 allowance with the new provider. **LISA transfer caution:** Transferring a Lifetime ISA to a non-LISA account triggers the **25% withdrawal charge** (effectively losing more than your bonus). Transfer only to another LISA provider. **Flexible ISA re-contribution:** If you hold a **flexible ISA**, you can withdraw and replace money within the same tax year without affecting your annual allowance — but this only works within the same flexible ISA, not as a transfer. **Why transfer?** Better interest rates, lower platform fees, better investment choice, or consolidating multiple ISAs into one account.

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