We're nearly halfway through the tax year, meaning you only have six more months to use up your £20,000 2019-20 Isa allowance. But could your savings be working harder?
Because you're only allowed to pay into one cash Isa account in any tax year, you might think any deposits you've already made are stuck until next April. But by making an Isa transfer, you can take advantage of better rates.
However, not all cash Isas accept transfers, and if you get the process wrong, you could end up burning through your tax-free allowance or even facing a tax bill.
Here, we reveal which cash Isas accepting transfers offer the top rates, and explain how the Isa transfer process works.
The majority of cash Isa accounts accept transfers. According to data from Moneyfacts, of the 322 fixed-term and instant-access cash Isas currently on the market, 289 allow Isa transfers, so there should be plenty of choice if you're looking to move your savings.
The table below shows the top rates available for instant-access cash Isas and each fixed term, by order of term.
|UBL UK 5 Year Fixed Rate Cash Isa||2.01% (EPR*)||£2,000 minimum initial deposit.|
|Punjab National Bank 4 Year Fixed Rate Cash Isa||1.6%||£1,000 minimum initial deposit.|
|State Bank of India 3 Year Cash Isa Fixed Deposit||1.9%||£5,000 minimum initial deposit.|
|Al Rayan Bank 24-month Fixed Term Deposit Cash Isa||1.8% (EPR*)||£1,000 minimum initial deposit. Transfers accepted for up to 30 days from account opening.|
|Cynergy Bank One-Year Fixed Rate Cash Isa||1.63%||£500 minimum initial deposit.|
|Coventry Building Society Limited Access Isa||1.46%||£1 minimum initial deposit. Three penalty-free withdrawals per year; further withdrawals subject to 50 days loss of interest. Rate reduces to 1.15% AER after 12 months.|
*Expected Profit Rate. Source: Moneyfacts. Correct 7 October 2019, but rates are subject to change.
The top-rate accounts that accept Isa transfers have the overall top rates too. So those moving their money won't be losing out on any interest.
While the general rule is that the longer you lock up your money, the higher rate you'll receive, this isn't the case with cash Isas right now. Savers considering a four-year fixed-term Isa could actually earn a higher rate with the top one, two and three-year accounts.
It's also worth noting that those with less than £1,000 to save will unfortunately be locked out from most of the top accounts. Only the shorter-term one-year fixed-term and instant-access accounts allow smaller initial deposits to be made.
Two of the accounts in the table are from, which pay an Expected Profit Rate (EPR) rather than an Annual Equivalent Rate (AER). The EPR is a target of what the bank expects to make, and it's not guaranteed. However, we haven't heard of an instance where the EPR has been reduced.
There are two main reasons why you might want to transfer the money held in an existing cash Isa over to a new one:
There are a few things you'll need to consider before moving your cash to a new provider:
Other Isa accounts are a little more tricky, but transfers can still be made.
In theory, all lifetime Isas are supposed to accept transfers, but many don't due to complications with the monthly government bonus payments. We detail which accounts do and don't accept transfers in our full .
Transferring a cash Isa should be taken care of by your providers in no longer than 15 working days.
Here are the steps you'll need to follow:
The first step is to find a new home for your savings. Crucially, the account must accept Isa transfers.
All cash Isa providers must let you remove your money. However, if you've entered into a fixed-term contract, you may be charged a fee if you take your cash out early.
The crucial thing to remember is not to withdraw money from your old Isa account yourself. You'll usually need to fill in an Isa transfer form with the new provider, and they'll do it for you.
Taking the cash out yourself will mean your money could lose its tax-free status, and when you then pay it into a different Isa account, the payment will be taken out of your Isa allowance.
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