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A guide to transferring your cash ISA

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Why should you transfer your cash ISA?

Transferring your cash ISA could significantly improve your returns by moving to providers offering the best rates. There is no limit on the amount of times you can transfer within the tax year, but you can only make new contributions into one cash ISA and one stocks and shares ISA each year. It is important to never move the money yourself, if done incorrectly your savings could lose their tax-free status.

Transferring your ISA

Your Cash ISA can be transferred from one provider to another at any time. Savings can be transferred to the same type of ISA or a different type if you wish. If you want to transfer money which has been invested in an ISA during the current year, all the savings must be transferred.

To switch providers, contact the ISA provider that you wish to move to. You will then need to fill out an ISA transfer form to move your account, this can be in paper form or online depending on your provider. If money is withdrawn without filling out this form, you may be unable to reinvest that part of your tax-free allowance again.

Can old ISAs be transferred?

All or part of the previous year’s ISA savings can be moved to any other ISA provider accepting transfers. This will not affect your ISA allowance for the current tax year.

You are only allowed to hold one “active” cash ISA per tax year but you may hold multiple “inactive” ISAs from previous tax years. Some prefer their money all in one place so choose to transfer their old ISA into a single new account each year, but there is no rule to say you must do this.

If you do choose to put all your ISA savings into one account, you will only be protected up to £85,000 – The maximum protected under the Financial Services Compensation Scheme (FSCS).

Restrictions on Transfer

An Innovative finance ISA allows savers to use some or part of their annual ISA investment allowance (£20,000 in the first year) to receive tax-free interest and tax-free capital gains on funds lent through Financial Conduct Authority regulated peer-to-peer lending platforms and other alternative investments.

Cash can be transferred from an innovative finance ISA to another provider, but you may not have the ability to transfer other investments from it. Check your provider for any restrictions they have on transferring your ISA, you may have to pay a charge or be unable to transfer during the fixed term period.

Not all ISA providers allow you to transfer your ISA online, this is something to consider if transferring online is important to you.

Be mindful transferring fixed rate ISAs before the account has matured, you could incur a penalty which will be deducted from your capital if not enough interest has been earned.

Deadlines for ISA Transfers

ISA transfers should take no longer than 15 working days for a cash ISA and cash Lifetime ISA. If your transfer takes longer than this, contact the ISA provider you are transferring from.

The Building Societies Association (BSA); the Tax Incentivised Savings Association (TISA) and UK Finance (UKF) has committed for 2018 that a minimum of 85 per cent of cash ISA transfers will be completed within seven working days.

This year, from January to June 2018, 89 percent of cash ISA transfers have been completed within seven working days. This represents progression within the industry to speed up cash ISA transfers and is set to meet the annual 85 percent commitment.

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*AER stands for Annual Equivalent Rate and illustrates what the interest rate would be if interest was paid and compounded on an annual basis.

Paragon Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England number 05390593. Registered office 51 Homer Road, Solihull, West Midlands B91 3QJ. Paragon Bank PLC is registered on the Financial Services Register under the firm reference number 604551