What are the ISA transfer rules?

ISA transfer rules: things you should consider before transferring an ISA

You might wish to transfer your ISA if you are looking for lower fees, more investment options or for a better interest rate. You can also transfer between types of ISA, such as from a Cash ISA to a Stocks and Shares ISA.

If you are thinking of transferring an ISA, there are various transfer rules which you need to consider. 

1. Don’t close your ISA if you are looking to transfer

If you are looking to transfer, don’t just close your ISA. Make sure you request a formal transfer instead of withdrawing the money yourself. To do this, contact the ISA provider that you want to move to.

When you withdraw money from an ISA, it loses its tax-efficient status. This means that it will count towards your annual ISA allowance if you add it to a different ISA. 

However, transferring an ISA does not use up your annual allowance. You can also choose to keep your existing investments if you are transferring a Stocks and Shares ISA. 

2. You can transfer any type of ISA

All types of ISA are transferrable. 

However, the transfer rules vary for each type of ISA.

• Cash ISA and Stocks and Shares ISA transfer rules allow you to transfer into any other type of ISA – except Junior ISAs. 
• You can only transfer Junior ISAs into other Junior ISAs. 
• Although it is technically possible to transfer a Lifetime ISA to a different type of ISA, you would lose your 25% government bonus for doing so. You can only withdraw money from a Lifetime ISA to buy your first home or after you turn 60.
• If you are transferring a different type of ISA into a Lifetime ISA, you will only be able to transfer a maximum of £4,000 – the annual limit for Lifetime ISAs.

3. You can transfer more than one ISA

You can transfer more than one ISA as there is no limit to the number of ISAs you can transfer in a year.

For example, if you had several old ISAs, you could consolidate them into one ISA account. You might wish to do this to save money on charges or to make it easier to manage your money or investments.

4. You can't transfer ISAs to anyone else

No, you cannot transfer an ISA to someone else. ISA accounts are registered in one name only and the tax-efficient benefits cannot be transferred. 

You would have to withdraw the cash from an ISA if you wanted to transfer the money in it to someone else. You could then give the money to the other person to add to their ISA. 

However, the money would lose its tax-efficient status. This means that it will count towards their ISA annual allowance and they could only add a maximum of £20,000. 

The only exception is when ISAs are inherited after death. 

Are ISAs transferrable on death?

ISAs can be inherited after death. However, your ISA may be subject to inheritance tax unless it is inherited by your spouse or civil partner. 

If you leave your ISA to anyone other than your spouse or civil partner, it will be added to your estate and subject to inheritance tax. The first £325,000 in your estate is tax-free, but anything over that threshold is taxed at 40%.

You spouse or civil partner can inherit your ISA using an Additional Permitted Subscription (APS) one-off increased allowance. 

Find out more about inheriting ISAs. 

5. Sometimes there are fees for transferring your ISA

Some providers do charge fees to transfer an ISA. It is important to check whether your provider charges any transfer fees before you transfer. 

At ii, we do not charge fees to transfer in or out of our Stocks and Shares ISA.