Transferring an ISA
You can transfer an ISA at any time, and it’s relatively simple to do. You can transfer from one type of ISA to another or to the same type of ISA. You might decide to transfer an ISA to reduce your fees, to increase your chances of potential returns, or to get a better interest rate.
But remember the golden rule: never withdraw the money yourself – always use your new provider’s transfer service. If you withdraw money from one ISA to contribute to another, you’ll lose the tax benefits and that money will count towards your annual allowance. By using your new provider’s transfer service your money will retain its ISA wrapper status and the transfer won’t affect your annual allowance.
If you transfer from a stocks and shares ISA to a Lifetime ISA, the transfer will count as a Lifetime ISA contribution, so you can’t transfer more than the annual £4,000 Lifetime ISA allowance. But, because it’s an ISA transfer, it won’t affect your overall ISA allowance. Not all providers (including Nutmeg) offer the ability to transfer funds from an ISA into a Lifetime ISA so it's worth checking with your provider if they offer this.
You can also choose to transfer part of an ISA, but only if it’s an ISA from a previous year. If you want to transfer money you’ve contributed in the current tax year, you have to transfer the full amount.
Why transfer an ISA?
If you have a cash ISA and you have no desire to change the type of ISA you put your money in, moving to a new provider might help you get a better interest rate. Or you might want to transfer to a provider with rules more suited to your needs.
By switching from cash to a stocks and shares ISA you may get better returns over the longer term – although, as with all investing, there is a possibility that you can lose money. Or you might want to find a stocks and shares ISA provider that offers lower fees.
But that’s not all. By transferring all of your ISAs to one provider and consolidating your money, you could save on fees. You could also save time and reduce your paperwork if all your ISAs are together.
Does it cost money to transfer an ISA?
Unfortunately, some providers charge you to transfer your ISA, and these fees might be hidden in the terms and conditions. So be sure to check with your current, or future, provider about any potential exit fees or penalties.
If you transfer your cash or stocks and shares Lifetime ISA to a different type of ISA before the age of 60, you’ll have to pay the 25% government penalty.
Transferring an ISA to Nutmeg
At Nutmeg, we offer stocks and shares ISAs and Lifetime ISAs. You can transfer stocks and shares ISAs to us, as well as any cash ISAs that you’d like to convert to stocks and shares. Nutmeg does not accept transfers into a Lifetime ISA at this stage.
And it’s easy to transfer an ISA to Nutmeg.
If you don’t yet have a Nutmeg account, sign up and complete your profile. If you already have one, just sign in.
Then, enter your current ISA details for us to arrange the transfer. For many providers we're able to conduct the whole ISA transfer process online. If your provider doesn't yet support electronic ISA transfers there's a form for you to sign and pop in the post to your existing provider.
Once we’ve got your ISA transfer details, we'll work with your current provider to transfer your ISA to us — safely and securely. This normally takes between two to four weeks, depending on your provider. You can track the status of your transfer by going to ‘My transfers’ in the ‘Transfers’ section of your mobile app or web dashboard.
It’s important to know that any stocks and shares ISAs that you transfer to us won't hold the same investments as before. We instruct your current ISA manager to sell the investments and transfer the ISA as cash for us to invest. This preserves your ISA's tax-efficient status and allows us to manage it in the most appropriate way for your goals, timeframe and attitude to risk.
With Nutmeg, all your previous and current ISAs are held within one portfolio, so you can see all of your investments under one account.
And the nice part is, we automatically enroll your new ISA allowance each year if you want, so you don’t have to worry about opening more accounts, you just keep paying in as normal.
As with all investing, your capital is at risk. The value of your portfolio with Nutmeg can go down as well as up and you may get back less than you invest. A stocks and shares ISA may not be right for everyone and tax rules may change in the future. If you are unsure if an ISA is the right choice for you, please seek financial advice.