ISA: Cash savings from previous tax years can be transferred – everything you need to know

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ISA transfers can occur at any time for cash accounts but there are a few things that savers need to be aware of. Before transferring the saver in question will need to ask their existing provider to sort the transfer to ensure the savings retain their tax-free status.

The existing provider must allow the saver to transfer their ISA, it should be noted that not all new providers will accept ISA transfers.

This will need to be checked on before any switch attempts are made.

Additionally, the current provider in place may charge a penalty for transferring away from them.

The costs of these kinds of fees and charges should be examined before any decisions are made to ensure the switch is worthwhile.

So long as a transfer is occurring, savers will be able to not only transfer their current cash ISA but also ISAs from previous tax years.

This, for some people, could potentially equate to several accounts worth thousands of pounds.

The money from previous years does not all have to go to one provider, the funds can be split among different financial companies.

However, the full amount contributed in the current tax ear must be transferred over in its entirety.

Holders of stocks and shares ISAs will also be able to transfer money back into a cash ISA.

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This is a relatively new feature, as previously a saver would have had to sell the investments they held, losing the tax perks in the process.

Cash and stocks and shares ISAs are two of the four main types of accounts available, with the remaining two being:

  • Innovative finance ISAs
  • Lifetime ISAs

All of these types of ISAs have different rules and benefits associated with them but in total, £20,000 can be invested into ISAs in a tax year.

A saver wishing to do this will need to be either a resident in the UK or a Crown servant if living abroad.

They must also be:

  • 16 or over for a cash ISA
  • 18 or over for a stocks and shares or innovative finance ISA
  • 18 or over but under 40 for a Lifetime ISA

There are also Junior ISAs which can be set up for children aged under 18 but these have a limit of £9,000 per year.

Some savers may also hold a Help to Buy ISA which can no longer be opened but they can still be transferred, so long as the providers involved accept Help to Buy accounts.

It should be noted that transfers do not have to go to banks or building societies as many types of companies accept ISA products

This includes credit unions, stock brokers and crowdfunding companies.

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