ISA Transfer Rules — Don’t Lose Your Allowance

ISA Transfer Rules — Don’t Lose Your Allowance

You can move money between ISAs without losing your tax-free status — provided you follow the official transfer process. Move it wrong and you lose your allowance. Here’s the 2026 procedure.

The Golden Rule

Always use the ISA transfer process. Never withdraw and re-deposit.

If you withdraw money from a Cash ISA, the moment it hits your current account it’s no longer in the ISA wrapper. Putting it into a new ISA counts as a fresh deposit against your current year’s £20,000 allowance.

Worked example:

• £30,000 in Cash ISA at Bank A (built up over years)
• Bank B offers a better rate
• You withdraw £30,000 from Bank A, deposit into Bank B’s ISA → £20,000 counts toward this year’s allowance; £10,000 cannot go in

If instead you complete a transfer form, all £30,000 moves while staying within the tax wrapper, and your current-year £20,000 allowance remains untouched.

How to Transfer Correctly

1. Open the new ISA at the receiving provider
2. Fill in their ISA transfer form (usually online during account opening)
3. Specify the previous provider, account number, and amount to transfer
4. Sign — sometimes a “wet signature” is still required, sometimes electronic
5. New provider contacts old provider, arranges the transfer
6. Cash typically moves within 15 working days; Stocks & Shares within 30 days

You don’t touch the money yourself at any point.

What Can Be Transferred

• Cash ISA to Cash ISA — yes, anytime
• Cash ISA to Stocks & Shares ISA — yes
• Stocks & Shares ISA to Cash ISA — yes (but you usually sell holdings first; check whether your provider allows “in-specie” transfers of shares)
• Lifetime ISA to Lifetime ISA — yes
• Lifetime ISA to other ISA — no (you can transfer to another LISA only, or close it with the early-withdrawal penalty)
• Junior ISA to adult ISA — automatic at age 18

Transferring Current Year vs Previous Year Contributions

Rules differ:

• Previous tax years’ contributions: Can be transferred in part or in full
• Current tax year’s contributions: Must be transferred in full (you can’t split current-year contributions between providers via transfer; though under the multi-ISA-provider rule from 2024, you can pay into multiple ISAs in the same year as long as totals stay within £20k)

In-Specie Transfers

For Stocks & Shares ISA: you may be able to transfer your actual holdings (the shares and ETFs) rather than selling them. This is called “in-specie.” Pros: no time out of market, no realized gains, no spread costs. Cons: receiving platform must support the same assets; not all do.

If in-specie isn’t available, the provider sells the holdings, transfers cash, and you rebuy on the new platform. This takes 2–4 weeks during which you’re out of market — a risk in volatile periods.

Common Transfer Mistakes

1. Withdrawing and re-depositing — biggest mistake; loses allowance
2. Not initiating from the new provider — the receiving provider must drive the transfer
3. Forgetting about old workplace ISAs (Junior ISA become adult ISA automatically — but you may not realize)
4. Mixing transfer year and contribution year — keep documentation of which years’ money is being moved

Bottom Line

Transferring between ISAs is straightforward and doesn’t cost you allowance — provided you use the receiving provider’s transfer form. Never withdraw money to “move” it yourself. The 15–30 working day timeline is annoying but the protection of the tax wrapper is worth it.