Investing in an ISA can be a simple, tax-efficient way of building up a nest egg, emergency fund, or making sure you have access to some extra cash in retirement.

Although establishing your savings strategy is a crucial part of any financial plan, it is also important to update this strategy regularly to ensure you continue getting the most for your money.

However, some customers might feel worried about switching ISAs and be tempted to stick with what they know rather than looking for the best deal.

To help with this, this article explains the process of transferring an ISA from one provider to another, clarifies the timescales involved, and discusses any exceptions that may occur.

How Can I Switch My ISA Account?

In line with the UK Government Website, the process of transferring an ISA from one provider to another should be simple.

To begin the transfer process, identify the ISA you want to transfer to. To get the best deal, check the ISAs offered by banks, building societies, and friendly societies like Sheffield Mutual. 

Start by identifying the interest rates and terms and conditions of any ISAs that look attractive, as well as any bonuses or extra benefits that you would receive. At this stage, it is important to research your ISA thoroughly and remain conscious of any restrictions, as some ISAs may offer higher rates of return in exchange for restricting access to your funds.

Once you have found an ISA you are interested in, compare the benefits with your current ISA, and evaluate whether the new ISA offers a higher rate of interest, additional benefits, or any bonuses that your current ISA doesn’t provide.

If you identify an ISA that provides more benefits or suits you better than your current ISA, all you need to do is contact the ISA provider that you want to transfer to.

At this point, you will then be asked to fill out an ISA transfer form, which will allow you to transfer your ISA to the new provider.

How Long Will It Take To Transfer My ISA?

The time it takes to transfer an ISA between two providers depends on the type of ISA being moved.

Because a Cash ISA is one of the simplest types of ISA available, for example, a transfer should be completed more quickly than it would for a Stocks and Shares ISA.

For a Cash ISA, Government guidelines advise that a transfer should take no longer than 15 working days.

For other types of ISA, including a Stocks and Shares ISA, the transfer should take place in no more than 30 working days.

Does A Transfer Affect My ISA Contribution Limit?

Transferring an ISA should not affect your annual ISA contribution limit.

However, this only applies if a complete transfer is completed. If, at any point, you withdraw the money as cash, then you will not be able to add this money to a new ISA without impacting your annual contribution limit (with the exception of some flexible ISA products).

Do I Have To Transfer To The Same Type Of ISA?

In line with Government guidance, you can transfer the value of your ISA to a different type of ISA, such as transferring a Cash ISA to a Stocks and Shares ISA, or transfer funds to the same kind of ISA, such as a transfer from one Cash ISA to another Cash ISA.

However, there is a specific type of ISA, known as an Innovative Finance ISA, in which not all the value is held in cash or shares.

Because of this, you may not be able to transfer all of the assets out of an Innovative Finance ISA. If you have this type of ISA and are looking to transfer it, contact your current ISA provider to clarify how this value can be transferred.

What About Lifetime ISAs And Junior ISAs?

The rules for transferring Lifetime ISAs (LISA) and Junior ISAs differ slightly from those for standard adult ISAs. In this section, we will break down the differences between the two.

Lifetime ISAs

In accordance with the UK Government’s website, a LISA can only be transferred between different LISA managers.

The amount transferred must be the full value of the LISA. If the Government Bonus claim (the additional 25% added by the Government to a LISA) has been submitted by the transferring manager but not yet received, it remains the responsibility of the transferring manager to ensure the new ISA manager gets the bonus.

It is also possible to transfer the value of a LISA into a Cash or Stocks and Shares ISA. However, there are some stipulations involved in this process.

Specifically, transferring from a LISA to a standard ISA is considered an ‘Unauthorised Withdrawal’ from the LISA, meaning that a charge of 25% of the value of the transferred funds will be applied. This is to prevent people from opening a LISA, receiving the 25% government bonus, and then moving those funds elsewhere.

However, this reduction may not apply in all cases if the customer is over 60 or has been declared terminally ill. 

Junior ISAs

Transferring a Junior ISA is similar to transferring an adult ISA.

The primary difference is that, instead of the account owner (in this case, the child) contacting the new ISA provider, it must be the ‘Registered Contact’ on the Junior ISA account, which means the adult with parental responsibility for the child who is managing the account.

Consider Switching Your ISA to Sheffield Mutual

At Sheffield Mutual, we offer a range of ISAs to support our customers’ needs and complement their investment strategy.

If you have a lump sum you want to invest, consider browsing our Single Premium Investment ISA to see how it can help your money grow.

Alternatively, if you want a savings strategy that makes the most of regular contributions, consider our Regular Premium Investment ISA, which offers flexible contributions that let you increase, decrease, stop, start, or pause contributions in line with your life circumstances.

In addition, both our Regular Premium Investment ISA and Single Premium Investment ISA allow you to contribute lump sums or add money monthly, regardless of which product you choose. This gives our members the flexibility to put aside a little bit of extra money when they have it, or increase contributions if their life circumstances change. 

Finally, if you are thinking of opening a JISA for your children, or you already have a JISA that you are considering moving, we provide an Investment Junior ISA, as well as our new Sustainable Junior ISA.

If you have questions about any of our products or if you are interested in becoming a member of Sheffield Mutual, please contact us, and our friendly team will be happy to help.

This blog provides generic information and the writer's opinions and should not be relied upon for investment decisions. Sheffield Mutual has provided no advice. If you doubt whether a savings or investment plan suits you, consider contacting a financial adviser for advice. If you do not have a financial adviser, you can get details of local financial advisers by visiting www.unbiased.co.uk or www.vouchedfor.co.uk. Advisers may charge for providing such advice and should confirm any costs beforehand.