Funding IFISAs with ‘Transfers’

Published on April 12, 2017

Freedom to move your existing ISA monies to new providers and ISA types

ISA ‘transfers’ refer to the movement of your ISA savings direct from one tax free ISA wrapper to another. Do not withdraw ISA money yourself with the intention of depositing it into a new or existing ISA. Providers arrange this direct once you’ve completed and signed the receiving provider’s transfer form.

Transfers enable you to freely move your ISA investments around – to diversify your holdings and consolidate them. While the 2017-18 allowances give us all significant scope to invest new money into ISAs, your right to transfer existing ISA funds mean it’s possible to invest larger amounts to the providers and asset classes that you want to – when you want to. You don’t have to build up your holding in new ISA types over a number of years or wait to take advantage of attractive rates.

You can transfer all or part of your existing ISAs to a new ISA, or consolidate them to another existing ISA. For a Cash ISA it might be that an introductory bonus rate has expired, or a tracker rate is now lower than you target return. It may be that you’re unhappy with service levels or you just think some or all that money could be working harder for you in a Stocks and Shares or IFISA, or both.

Some key points to remember about transfers

  1. All transfers from one ISA to another are made direct from provider to provider – in cash
    • Do not transfer or withdraw funds from your ISA yourself that you’re intending to transfer
    • You cannot transfer the investments held in one ISA ‘in specie’ to another ISA. You can sell them and invest the cash.
  2. If a transfer is coming from a Stocks and Shares ISA or IFISA, you’ll need to sell the investment holdings in that ISA to make funds available for the provider to transfer
    • Depending on whether it’s a full or partial transfer, you may need to decide which investments to sell to fund the transfer
  3. You can request a ‘full’ transfer (of the entire value of an ISA) or a ‘partial’ transfer (of some of the value) of any ISA
    • Some providers may only allow you to make full transfers out of their ISAs and some providers may charge fees for transferring
  4. If you’re requesting a transfer that includes current year subscriptions then all current year subscriptions in that ISA must be transferred. Your pot of new subscriptions in that asset class must stay together.
    • Transferring all of your current year subscriptions to a new ISA of the same type doesn’t break the one ISA per type per year for new subscriptions rule – the receiving scheme is effectively the replacement one for the year
  5. You can request the transfer of funds from one ISA type to another as well as between the same types. Remember – you can’t instruct the transfer of assets, just cash.