Isa transfer rules explained 2025: How to move your Isa tax-free

Until recently, an Isa transfer was the only way of accessing a better deal if you’d already paid into the same type of Isa within the same tax year.

The rules changed last year, so you can now pay into as many Isas as you like – but transferring your money to a different Isa provider can still be beneficial.

The transfer process can seem tricky – and, crucially, you shouldn’t try to do it yourself. Your new provider should do most of the heavy lifting, so don’t let it put you off moving to a different account.

Here, Telegraph Money explains how to make an Isa transfer, covering the following:

• What is an Isa transfer?
• What are the transfer rules for each type of Isa?
• Isa transfer rules around tax
• How to transfer an Isa in three simple steps
• Common Isa transfer mistakes

What is an Isa transfer and why do it?

An Isa transfer is when you move some or all of your balance from one Isa to another – you might be transferring to the same type of account, or a different one. Transferring an Isa properly ensures your savings maintain their tax-free status, while allowing you to take advantage of a better account.

Sarah Coles, of the broker Hargreaves Lansdown, said: “The main reason people transfer a cash Isa is to get a better rate. Isa rates have fallen from the peak, but we’re still seeing easy access cash Isas offering over 5pc, and fixed rates not far off, which are the kinds of deals that savers could only have dreamed of during over a decade of miserable rates.

It used to be the case that savers could only pay into one of each kind of Isa in the same tax year, depositing up to £20,000 per year across all Isas. To get a better rate elsewhere, you’d have to instruct an Isa transfer. While this is no longer necessary, you may still want to make a transfer.

“Some people will want to transfer cash or stocks and shares Isas to bring them all together in one place,” said Ms Coles. “It’s far easier to keep on top of your savings and investments this way, and to make any changes you need. If you’re guilty of hoarding stacks of statements you never really check, then this is a chance to take the paperwork out of the process and make it easier to engage with.”

Alice Haine, of investment manager Bestinvest, said: “A further reason can be dissatisfaction with the service levels of an existing Isa provider. Account costs between different stocks and shares Isas are one factor that might drive transfers, but so are the range of investment choices and added extra features built into the service, such as research or tools.”

What are the transfer rules for each type of Isa?

Although the process of how to transfer an Isa is largely the same, the rules do differ by type. In this section, we go over the rules regarding:

• Cash Isas
• Stocks and shares Isas
• Innovative finance Isas
• Lifetime Isas

A rule that applies to all Isas is that you can’t move an Isa into someone else’s name, nor can they be joint accounts.

Junior Isas are available for children under 18, but will become an adult Isa when they turn 18. A parent or guardian can move their child’s Junior Isa, but they won’t have any control over the account once it becomes an adult Isa.

Cash Isas

A cash Isa is similar to a saving account; your money is saved as cash and you’ll earn interest on what you save.

You can transfer a cash Isa as many times as you want during the tax year, and transferring from one to another should take no more than 15 working days.

Ms Haine said: “As cash Isa rates are now much more competitive, be sure to hunt out the best deal to secure the best return. But note that some Isa providers don’t accept transfers, and some won’t allow a partial transfer out, insisting all funds are moved and the account closed.”

Stocks and shares Isas

A stocks and shares Isa can hold a range of investment products. These could be unit trusts, investment trusts, exchange-traded funds, individual stocks and shares, corporate and government bonds, and Open Ended Investment Companies (OEICs). You open the Isa, fund it and make investments, which will hopefully increase over time.

If you want to move a stocks and shares Isa, the process is similar – but it can take up to 30 days.

Typically, transfers between stocks and shares Isas are “cash transfers”. This is where the current underlying holdings within the Isa are sold before the cash proceeds are then transferred to the new one.

The new provider will use the cash proceeds to reinvest within the new stocks and shares Isa.

Alternatively, you can have an ‘in specie’ transfer. Clare McCarthy, chartered financial planner of The Private Office, said: “This is where all your current underlying holdings are moved between Isa providers without being sold to cash.”

While an in-specie transfer helps to avoid any ‘out of market’ period (when your cash isn’t invested), and can help reduce ongoing fees, this type of transfer can take three-to-six months, due to the underlying holdings needing to be ‘re-registered’ with the new Isa provider.

Ms McCarthy added: “During this period, changes to the Isa usually can’t be made, which could prove challenging if, say, you wanted to withdraw money.”

You should also check whether your provider charges fees for you to transfer out.

Ms Coles said: “In some cases when transferring ‘in specie’, the provider will charge a separate fee for each investment you transfer. If this is the case, you might want to think about consolidating your investments before you switch to cut the costs. But you’ll need to calculate whether it’s worth it.”

Innovative finance Isas

It may not be possible to transfer investments from an innovative finance Isa to a different Isa type – but you should be able to transfer cash. Transferring innovative finance Isas can take up to 30 days.

Check with your provider for any restrictions.

Lifetime Isas

You can transfer a lifetime Isa without penalty and there’s no limit to how much money you can move, including your bonus. It will also take up to 30 days.

However, due to the complicating factor of government bonuses and deposit restrictions, there may be restrictions on transfers from a Lisa.

If you want to move a Lisa into a different type of Isa, it will count as a withdrawal and you’ll pay a 25pc withdrawal penalty, which could mean you lose more than you put in. This does not apply if you’re over 60 or are terminally ill with less than 12 months to live.

Isa transfer rules around tax

Done properly, there shouldn’t be any tax implications when you transfer an Isa – your money will remain in the tax-free “wrapper” the whole time.

A tax issue could arise if you withdraw the funds yourself, and hold them in a non-Isa account before moving it to an alternative Isa. In this case, the money would have been removed from the Isa wrapper, and if it were to earn any interest this would be taxable. Our savings tax calculator can help you work this out.

James Baxter, of Tideway Investment, said: “As long as it’s Isa to Isa, there should be no tax implications for transfers.

“But on tax there is an important point which I think is missed by most people. Like pensions or Sipps [self-invested personal pensions], investing in an Isa means no tax on investment returns. But unlike a pension, Isa funds are 100pc accessible tax-free. With a flexible Isa, you can also borrow from your account and as long as the funds are returned within the tax year, you can keep your accumulated Isa fund. So you can use them as a source of bridging finance within a family.

“For example, if a child is buying a property a parent could temporarily borrow from their Isa and make their child a cash buyer with all the negotiating power that goes with that. After the house is bought, a mortgage could be arranged and funds returned to the flexible Isa.

“It also doesn’t affect that year’s allowance if you put the same amount back in, leaving you with the full £20,000 to contribute to your flexible Isa or to a different one.”

Another way to use the tax rules to your advantage is sharing out your Isa allowance with your spouse.

Ms Haine said: “Married couples and civil partners have a unique advantage over their unmarried peers; the ability to make interspousal transfers without incurring a tax charge.

“So, if one partner has utilised their Isa allowance in full, they could transfer cash to their spouse to take advantage of their Isa allowance as well – just remember their other half then becomes the legal owner of those assets so this should only be initiated by those in a strong relationship.”

How to transfer an Isa in three simple steps

Transferring Isas between providers is usually a similar process, regardless of which type they are.

1. Find your new Isa provider. If this is a cash Isa, it’s likely one with a higher interest rate – our guide to the best cash Isa rates can help you find a top-rate account. Once you’ve selected your new provider, you then need to open an account.
2. Initiate the transfer request. Next, you need to let your new provider know that you want to transfer an existing Isa over to them, thus circumnavigating any potential tax bills you might get were you to withdraw the money and deposit it yourself. There is often a transfer option on providers’ websites or apps. Your new provider may well prompt you to transfer as soon as you’ve opened your new account.
3. Complete the transfer request form. This will enable your new provider to locate your existing Isa and making the switch.

Cash Isa transfers should be completed within 15 days working days, while other types take up to 30 calendar days. If your transfer takes longer than this, you should contact your provider. If you’re not happy with their response, you can take the matter to the Financial Ombudsman Service.

Common Isa transfer mistakes

The major mistake people can make is not using the system offered by their new provider when transferring an Isa. If you try to make the transfer yourself by withdrawing money from your Isa to your bank account and then put it into a new Isa, this will count towards the £20,000 Isa limit you can deposit each year.

If you’ve withdrawn more than this, you won’t be able to put it all back in during the same tax year, which might cost you in missed earnings.

The money sitting outside your Isa also won’t be tax-protected, so you might have to pay tax on the interest you earn.

Ms Haine said: “Any new contribution into another Isa counts towards the annual £20,000 Isa allowance for that tax year whereas initiating a transfer does not. This is less of an issue for those with smaller Isa pots, as they are unlikely to use their allowance in full anyhow. But it is a headache for those with larger Isa holdings as making the wrong move could see them lose the tax-free status on a very large chunk of money, making them liable for unnecessary tax charges.”

Another mistake is transferring for a better deal on a cash Isa, but failing to take fees into account. Sarah Coles, of broker Hargreaves Lansdown, warned: “If you want to move a fixed-term account before maturity, you will have to pay a penalty. Before you do anything, it’s worth calculating whether the penalty cancels out any benefit from the move.”

Providers commonly charge between 30 and 120 days’ interest on the sum being withdrawn or moved before the account matures – in general, the longer the term, the higher the penalty. If you’re only going to be gaining a small amount of interest then this loss may not be worth it.