You can move your ISA savings or investments to a different provider, or switch from one type of ISA to another, without losing the tax-free status that's already been built up — but only if you follow the correct transfer process. Withdrawing the money yourself and paying it into a new ISA is a common and costly mistake.
Why the transfer process matters
ISAs have an annual contribution allowance (£20,000 for the current tax year), but the balance you've already built up in previous years isn't capped by that allowance — it just needs to stay inside an ISA wrapper to keep its tax-free status. The official ISA transfer process moves the money directly between providers behind the scenes, so it never counts as a new contribution and never uses up any of your current year's allowance. If you withdraw the cash yourself and pay it into a new ISA, it's treated as a brand new contribution, using up your current year's allowance and potentially pushing you over the £20,000 limit.
The correct way to transfer
- Open the new ISA with your chosen provider (you don't need to close the old one first)
- Complete the new provider's ISA transfer form, which authorises them to request the funds from your old provider directly
- The two providers handle the transfer between themselves — you never receive or handle the money
- Your old ISA is closed (or left with a zero balance) once the transfer completes
Cash ISA transfers are meant to complete within a set number of working days by industry agreement; transfers involving Stocks & Shares ISAs, especially where investments are sold and repurchased ("cash transfer") rather than moved "in specie" (as-is), can take longer.
Cash transfer vs "in specie" transfer
| Transfer type | What happens | Considerations |
|---|---|---|
| Cash transfer | Investments are sold, cash is transferred, then reinvested (if applicable) with the new provider | You're briefly out of the market; simpler if switching investment types |
| In specie transfer | The actual investments are moved to the new provider without being sold | Avoids being out of the market and re-buying costs, but not all providers support it, and it can take longer |
Switching ISA type
You can transfer from a Cash ISA into a Stocks & Shares ISA, or vice versa, using the same process — the new provider handles it. The exception is the Lifetime ISA, which has extra rules: you can transfer a Lifetime ISA to another Lifetime ISA freely, but moving Lifetime ISA funds into a different ISA type before age 60 (other than for a first home purchase) generally counts as an unauthorised withdrawal, triggering a government withdrawal charge.
Transferring only part of your balance
You can usually choose to transfer only money paid in during previous tax years, leaving the current tax year's contributions with the old provider (some providers require you to transfer the whole current-year amount together, though, so check first) — useful if you want to keep contributing to your existing ISA this year but consolidate older balances elsewhere.
Common mistakes
- Withdrawing the money and redepositing it manually, which uses up current-year allowance and can breach the £20,000 limit
- Not checking for exit fees or a delay penalty (rare, but some cash ISAs apply a notice period or interest penalty on transfer)
- Assuming a Lifetime ISA can be freely converted to another ISA type without a withdrawal charge
- Leaving the old account open unnecessarily after a transfer, forgetting about small residual interest payments
What to do next
Decide on your new provider first, then start the transfer through them using their official ISA transfer form — never withdraw the funds yourself. If you're transferring investments, ask whether an in specie transfer is available to avoid being out of the market during the switch.