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🔔 Ask Anna - How often can I transfer my ISA?

Author: Anna Bowes
27th October 2017

Dear Savings Champion,

 

I have just transferred a cash ISA from Halifax (paying a derisory interest) to one of the new Virgin accounts you recommended, and was amazed how smooth and easy the process was. This has stimulated me to do this more often. Can you confirm my understanding please that there is no limit on the number of times that you can transfer money between existing cash ISA’s when trying to maintain a decent rate of interest, as long as you do it in the correct manner, i.e. by contacting the provider you wish to transfer to and allowing them to initiate the transfer?

 

If you wish can you request transfer of a portion of an existing ISA rather than the whole balance, then request transfer of another portion to a different provider if you wish?

 

Anna's reply 

 

Many thanks for your email – I am so pleased that you have not only been able to increase the interest you are earning on your ISA, but also that it was a smooth and simple process!

 

The answer to your question about how often you can transfer your ISA is as follows;

 

ISA transfer rules allow you to transfer your accounts from one provider to another as often as you like – just like a normal savings account. Although there are some things to be aware of.

 

First, if you have funds in a fixed rate ISA, while you will be able to transfer out again within the term, there will normally be a very hefty penalty for doing so, which may negate any additional interest that you might earn elsewhere – so you should make sure that you are clear about any penalty that may apply before transferring.

 

Second, with regard to making a partial transfer, ISA rules state that you must transfer ALL the money you deposited in a cash ISA during the current tax year  into one new ISA account.

 

But for money you deposited in previous tax years, you can choose to transfer all or part of your savings, to one new provider or to several,  assuming your ISA providers allow it.

 

And finally, as you mentioned it is really important to transfer in the correct manner – to transfer you must complete a transfer form with your new provider and they will request the funds from your old provider. If you simply cash in your ISA, you will not be able to reinvest into a new ISA without using the current tax years’ allowance.

 

So If you have already used your ISA allowance or the amount you are transferring is greater than £20,000, you could end up paying tax on savings that were previously tax free.