The Telegraph: Isa transfer rules: a comprehensive guide

Until recently, an Isa transfer was the only way of accessing a better deal if you’d already paid into the same type of Isa within the same tax year.

The rules have since changed – but transferring your money to a different Isa provider can still be an important way to make sure your money is working as hard as possible.

The transfer process can seem tricky but your new provider should do most of the heavy lifting, so don’t let it put you off moving to a different account.

Here, Telegraph Money explains how to make an Isa transfer, covering the following:

  • What is an Isa transfer?
  • Eligibility for Isa transfer
  • Steps to transfer your Isa
  • Types of Isas and transfer rules
  • Common mistakes to avoid in Isa transfer
  • Tax implications of transferring an Isa


Tax implications of transferring an Isa 

Done properly, there shouldn’t be any tax implications when you transfer an Isa – your money will remain in the tax-free “wrapper” the whole time. 

A tax issue could arise if you withdraw the funds yourself, and hold them in a non-Isa account before moving it to an alternative Isa. In this case, the money would have been removed from the Isa wrapper, and if it were to earn any interest this would be taxable.

James Baxter, of Tideway Investment, said: “As long as it’s Isa to Isa, there should be no tax implications for transfers. 

“But on tax there is an important point which I think is missed by most people. Like pensions or Sipps [self-invested personal pensions], investing in an Isa means no tax on investment returns. But unlike a pension, Isa funds are 100pc accessible tax-free. With a flexible Isa, you can also borrow from your account and as long as the funds are returned within the tax year, you can keep your accumulated Isa fund. So you can use them as a source of bridging finance within a family.

“For example, if a child is buying a property a parent could temporarily borrow from their Isa and make their child a cash buyer with all the negotiating power that goes with that. After the house is bought, a mortgage could be arranged and funds returned to the flexible Isa.

“It also doesn’t affect that year’s allowance if you put the same amount back in, leaving you with the full £20,000 to contribute to your flexible Isa or to a different one.”

To read the full article visit The Telegraph .

  • The content of this document is for information purposes only and should not be construed as financial advice.
  • Please be aware that the value of investments, and the income you may receive from them, cannot be guaranteed and may fall as well as rise.
  • We always recommend that you seek professional regulated financial advice before investing