Stocks and shares Isa transfers
By Michael Trudeau
Stocks and shares Isa transfers
Find out how to transfer a stocks and shares Isa, and why doing so could save you money on charges and better investment deals.
Unlike cash Isa transfers, stocks and shares Isa transfers aren't just about chasing a better return.
There are many reasons why you might choose to transfer your account from one provider to another while not necessarily making changes to the underlying investments:
- You might calculate that you'd be better off with a new provider offering lower fees or dealing commissions.
- You might seek out a provider offering wider investment choice.
- You might be unhappy with your existing provider and value better online facilities or customer service.
Crucially, transfers do not count as new contributions for the current tax year, so you can move money invested in previous tax years in addition to making new Isa contributions.
Find out more: Fund supermarkets reviewed – read our unique ratings for stocks and shares Isa providers
There are two ways you can transfer your stocks and shares Isa from one provider to another. You can carry out an 'in specie' transfer or a cash transfer. Here we will explain how each option works, and outline the pros and cons of each approach.
'In specie' transfers
This is the industry jargon term for a stock transfer and is also sometimes called 're-registration'. It means that all the investments you hold in your stocks and shares Isa are transported to your new provider – you stay invested throughout the process.
If you're happy with your investments, this type of transfer makes sense, although it is likely to take longer, typically four to six weeks, and you might have to pay exit fees to your existing provider.
With this type of transfer, your investments are sold and the proceeds passed to your new provider. The Isa status of your cash remains in place throughout the process – your new provider will just reinvest your money in line with your instructions.
Cash transfers are typically quicker, but your money will be out of the market, meaning that if shares go up, you could miss out on some of the gains. Nevertheless, if you intend to use your transfer as an opportunity to give your portfolio a fresh start, transferring as cash is the logical option.
Transferring a cash Isa to a stocks and shares Isa
It is also possible to transfer your cash Isas into a stocks and shares Isa – and with interest rates still flirting with historic lows, this might prove a tempting option for some frustrated savers searching for a better return.
But the security offered by cash savings is not something to give up lightly, and transferring should only be contemplated by those happy to accept the risk that they could lose money on the markets.
Transferring a stocks and shares Isa to a cash Isa
From July 2014, it has also been possible to transfer from a stocks and shares Isa to the safety of a cash Isa without losing the Isa status on your money. You can do this as many times as you like.
As with other types of Isa transfer, you will need to contact the cash Isa provider you would like to transfer to and complete its transfer form.
If you would like to complete a partial transfer, selling some investments in order to transfer the proceeds to a cash Isa but leaving others invested, and the transfer form does not give you this option, you will need to either include a covering letter stating your instructions with your transfer form or contact your stocks and shares Isa provider separately in order to make your intentions clear.
Contacting your stocks and shares Isa providers in more-complex scenarios should minimise the possibility of any misunderstanding.
It should also be noted that many stocks and shares Isa providers allow investors to hold cash on a temporary basis within a stocks and shares Isa while they are out of the market. This option should continue but, as before, interest rates will usually be negligible, and the option should not be confused with a cash Isa.
Step-by-step guide to transferring a stocks and shares Isa
Which? Money has found that parts of the investment industry are coming up short when it comes to efficiency and swift transfer processes – we've even found some examples of transfers taking more than 10 weeks to complete.
But your choice of Isa provider can make a real difference to your returns, with charges and investment choice just two factors to consider when making sure you are using the right one for you.
Here, we take you through the steps you need to follow when transferring to ensure everything goes through as quickly and efficiently as possible.
Step 1 - Shop around for the best Isa for you
There are plenty of stocks and shares Isa providers to choose from, and most DIY investors (those not using a financial adviser) will use a fund supermarket.
Find out more: Fund supermarket reviews – our unique ratings for stocks and shares Isa providers
Step two - Decide if you want to transfer your Isa as stock or cash
If you're happy with your investments, opt for a stock transfer. If you want to start afresh, go for a cash transfer.
If you would prefer to transfer to the safety of cash, it is now possible to transfer to a cash Isa without losing the Isa status on your money.
If you transfer as stock (known as an in-specie transfer), your investments will be re-registered as they are and you won't be out of the market. With a cash transfer, your investments will be sold and the proceeds passed to your new provider for them to reinvest in line with your instructions.
This approach might be cheaper, as many fund supermarkets levy a transfer charge for every line of stock you hold. However, you'll suffer from the bid-offer spread between the selling and buying prices, and you'll also spend time out of the market, which means you could miss out on beneficial movement in prices.
Step 3 - Contact your new provider or visit its website
Once you've selected your new provider, you will need to contact it and complete its transfer form. Most will offer the option to download the form online, but it will be necessary to print off and send the form through the post as most providers will want a 'wet' signature.
If all goes to plan, your new provider will organise everything from here and tell you when the transfer is complete.
Step 4 - Watch out for exit fees
It's possible that your old provider will charge you exit fees, especially if you have opted to transfer as stock. While some providers won't charge you anything, we've found others charging exit fees ranging from £15 to £30 per stock.
However, it's possible that your new provider will agree to cover these charges for you, so get haggling. It's not uncommon for providers to cover hundreds of pounds' worth of exit fees as an incentive to use their service.
Step 5 - Once your transfer is under way, get chasing
If things seem to drag on, hit the phones again. Call your new provider to find out what's going on. However, it's more likely to be your old provider dragging its feet.
Your new provider should chase for you but it won't hurt for you to give it a nudge yourself.
Step 6 - Once your transfer is complete, check for missing payments
Leave it a few months and then call your old provider to check if any dividends or interest payments have come in. For example, dividends are normally paid around two months after the qualifying date, so it's possible that a payment will arrive in your old account long after you are up and running with your new provider.
Your old provider should forward these payments to your new provider automatically, but we've found examples of dividends sitting in dormant accounts for months or being paid out by cheque.
- Last updated: November 2017
- Updated by: Michael Trudeau