Transferring your ISA can be a savvy move for savers, especially given the instability of interest rates in the current financial climate.
By keeping a close eye on rates across the spectrum of ISA providers and transferring when your current rate drops, you can make your account work harder for you.
Transferring can make sure you’re receiving the best possible rate on offer at the time and ensures you make the most of your hard-earned savings. But before you do consider transferring, make sure you keep in mind the one fundamental rule of ISA transfers:
If you want to transfer your ISA, make sure you do it properly - never just withdraw the money or you'll immediately lose all the tax benefits.
Many people have lost out on their tax-free allowance by not following the correct procedure so make sure you follow the procedure explained below.
ISA transfers used to take longer than was practical, this left people wondering if it was worth it and not taking advantage of better deals which may have been on offer. However, thanks to recent guidelines, transferring an ISA from one provider to another is now a fairly straightforward process:
Once you have sent off the ISA transfer form, your new ISA provider should contact your current ISA provider within five working days. The ISA transfer process should take no longer than 15 working days.
When an ISA is transferred, the old ISA manager must give the new ISA manager a notice in writing containing information and a declaration, known as a transfer history form.
Once the transfer is done, your new ISA provider will be in touch to confirm this.
The short answer is yes - you are free to transfer previous years' ISA balances to a better rate, as well as opening a separate account, as long as you only put cash into the latter account.
You can pay into one cash ISA and one investment ISA each tax year, but transfers don't count as 'paying in'. You can transfer as many times as you like, and there's no set time in the tax year when you need to transfer.
Not necessarily but it is possible, depending on your provider. Your existing ISA manager cannot stop you transferring, but they may charge you for it. However, this is becoming less common, particularly with cash ISAs. You should contact your current ISA provider and confirm their policy on this before making a decision.
When choosing an ISA, there are a number of things to consider. We’ve highlighted some of the most important factors below:
Timescale of investment - If you need access to your capital and you are not looking to invest for the long term you should consider a Cash ISA. However, if you are happy to tie up capital for the medium to longer term you may wish to consider a Stocks and Shares ISA which has the potential to provide better returns then a Cash ISA over the longer term
Attitude to investment risk - If you are not prepared to lose capital then a Cash ISA is probably the better option for you. It good to remember that, over the long term, inflation can erode your capital in real terms so getting a good rate of interest on your cash ISA should be a priority. If you are prepared to risk capital to achieve higher potential returns then a stocks and shares ISA may be the best option for you.
Charges - Different ISA plans will have different charges. It is important that you are aware of what these are and how they could affect your ISA performance. Also be aware that some accounts apply account closure charges if you try to switch before the agreed amount of time.
This website contains information only and does not constitute advice or a personal recommendation in any way whatsoever. The value of investments and income from them can fall as well as rise and you may not get back the full amount invested. The tax efficiency of ISAs is based on current tax law and there is no guarantee that tax rules will stay the same in the future.
Different types of investment carry different levels of risk and may not be suitable for all investors. Please ensure that you read the Important Risk Information for further details. Prior to making any decision to invest, you should ensure that you are familiar with the risks associated with a particular investment and should read the product literature. If you are in any doubt as to the suitability of a particular investment, both in respect of its objectives and its risk profile, you should seek independent financial advice.
ISAs are a tax-advantageous way to save or invest, check out some of the ISA options below
There are a range of types of fund ISA
16th November 2016
You can invest your full ISA allowance of £15,240 into one ISA or split your allowance between the three types of ISA available. Cash, Stocks and Shares and Innovative Finance. However, this leaves the question of how to choose what works best for you?
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