Why should I transfer my cash Isa?
Old Isas can pay miserable rates of interest, so you could significantly improve your returns by transferring to providers offering the best rates.
There are no limits on the number of transfers you can make in a tax year. However, you can only make new contributions into one cash Isa and one stocks and shares Isa each tax year.
Never move the money yourself – if your Isa transfer is done incorrectly, your savings could lose their tax-free status.
Here, we explain how to find the best Isa for your savings, and how to transfer your Isa funds correctly so that your tax-free allowance remains intact.
How do I transfer a cash Isa to a cash Isa?
Step 1: Find a best rate cash Isa that allows transfers in
The Which? Money Compare savings and Isa comparison tables let you search Isa accounts to choose the best rates based on quality of service, as well as the benefits of the product itself.
Which? Money Compare tables also make it clear whether or not an Isa accepts transfers in from other providers. Make sure you pick one that does.
If you need help, our interactive flowchart below makes it simple for you to decide whether to transfer your Isa funds, based on how quickly you need access to your money, your attitude to risk and whether or not you're willing to take financial advice.
Step 2: Watch out for penalties
All cash Isa providers must let you remove your money if you wish to, but some may issue a penalty if you do – usually in the form of a reduction in interest. This is most common with fixed-rate Isas that are yet to mature.
If your current Isa provider charges you for transferring funds, weigh up whether it's worth paying the penalty in order to secure an improved interest rate.
Step 3: Don't do it yourself – get your new provider to arrange the transfer
It's essential that you arrange your transfer through your new provider.
If you simply withdraw the money yourself and seek to reinvest it, this will be subjected to the rules surrounding new deposits. Your savings could lose their tax-free status as a result.
Your new provider will ask you to fill in an Isa transfer form, so you'll need the basic details of your old account to hand. Some providers will also allow you to set up Isa transfers online or over the phone.
How long does the Isa transfer take?
Under regulations introduced in 2011, the transfer should take no longer than 15 working days. Some providers will even begin paying interest on balances from the day it receives a signed form.
If the transfer takes longer than 15 working days, contact your new provider to complain. Isa providers are obliged to begin paying interest within 15 days of receiving a transfer request, regardless of whether the transfer is completed or not.
The Financial Conduct Authority (FCA) is working with industry to deliver seven-day switching for the vast majority of cash Isa transfers from January 2017.
Remember, there's no limit on the amount of transfers you can make, so continue keeping an eye out for the best rates.
Can I move my old Isas?
Yes. You can move all or part of previous years' Isa savings to any other Isa accepting transfers. This will not affect your Isa allowance for the current tax year.
While you're only allowed to hold one 'active' cash Isa per tax year – that is, an account into which new Isa money is being paid – you can hold multiple 'inactive' Isas from previous tax years.
Some people like to have all their money in one place, and so choose to transfer their old Isas into a single new account each year. However, there is no rule that says you must do so.
If you choose to roll up all your Isa savings into one account, be careful that this doesn't push the total amount you hold in savings with a single financial institution above £85,000 – the maximum protected under the Financial Services Compensation Scheme (FSCS).
Find out more: Protecting my savings – how the compensation scheme works.
What if I've already paid into an Isa this year?
If you want to transfer money already paid into an Isa in this tax year, you must transfer all of it.
For old Isas, you can choose to transfer all, or part, of your savings.
If you wish to (and provided you have not paid into a fixed-rate cash Isa), you can transfer all of your savings – including the money you have put into this year's cash Isa – to a new provider. However, be sure to check whether you'd be better off by keeping your cash separate.
Isas that allow transfers may pay lower interest rates than those that don't, so it can make sense to hold two separate Isas each year: one for older savings which you can no longer pay into, and one for the current year's Isa allowance.
Which? Money Compare tables: Fixed-rate cash Isas – all available deals compared.
How do I transfer a cash Isa to a stocks and shares Isa?
There's no limit on the amount of money you can transfer from a cash Isa to a stocks and shares Isa. However, this option should only be considered if you're happy to accept the possibility of losing money should your investments drop in value.
Step 1: Choose a stocks and shares Isa provider
Stocks and shares Isas are offered by many fund supermarkets (also known as investment brokers), as well as banks and building societies.
In order to select the best provider, you should consider the range of investments offered as well as the fees charged. We've reviewed 14 fund supermarkets, providing unique customer satisfaction scores and star ratings for six different elements of their services.
Find out more: Fund supermarket reviews – find out which fund supermarkets are best for customer satisfaction
Step 2: Fill out a stocks and shares Isa transfer form
Never withdraw money from your cash Isa yourself and then seek to reinvest it with your stocks and shares Isa provider. This type of transaction will be subject to the limits associated with new deposits.
Instead, you'll need to fill out a transfer form with your new provider who will ask you for instructions on how to invest your funds.
Step 3: Wait for your stocks and shares provider to get in touch
Your stocks and shares Isa provider will contact your cash Isa provider to complete the necessary transactions. The process should take no longer than 30 days.
During this process, your funds will keep on earning interest in your cash Isa. Your stocks and shares Isa provider should get in touch to let you know when the transfer has been completed.
There are no limits on the amount of transfers you can make per tax year, but it's likely you'll have to pay ongoing charges to your stocks and shares Isa provider and for the specific investments you make, so it's a good idea to do your research before transferring any money.
These fees vary, depending on what you invest in, but aren't usually any higher than what you'd pay if you invested in stocks and shares outside an Isa.
How do I transfer from stocks and shares to a cash Isa?
Fill out an Isa transfer form from the cash Isa provider you want to transfer to, stating how much you want to transfer, and which investments you want to sell.
The transfer times could vary depending on the types of investments you are selling, for example, unit trusts take around five days to cash in, shares around three.
After your investments have been sold, the transfer of your funds from your stocks and shares Isa should take no longer than 30 days.