Does Transferring an ISA Count as Opening a New One? UK Guide

ISAs (Individual Savings Accounts) allow UK savers to grow money tax-free. However, many people wonder whether transferring an ISA to a new provider counts as opening a new ISA and whether it affects their annual ISA allowance.

This guide explains how ISA transfers work, what types of ISAs can be transferred, the rules and limitations, and why you might want to move your ISA.

What’s an ISA?

• An Individual Savings Account (ISA) is a tax-free savings or investment account.

• The annual ISA allowance for 2024/25 is £20,000.

• ISAs are free from income tax and capital gains tax.

Types of ISAs

• Cash ISA – A tax-free savings account.

• Stocks & Shares ISA – Invests in shares, bonds, and funds.

• Innovative Finance ISA – Peer-to-peer lending investments.

• Lifetime ISA (LISA) – For first-time homebuyers or retirement savings.

• Junior ISA (JISA) – A tax-free savings or investment account for children.

Each person can only pay into one of each ISA type per tax year, but you can transfer ISAs between providers.

Does Renewing or Transferring an ISA Count as a New ISA?

• No, transferring an ISA does NOT count as opening a new ISA.

• You can transfer an ISA at any time without it affecting your ability to open or contribute to a new ISA in the same tax year.

• Your ISA remains tax-free after a transfer.

Example of an ISA Transfer

Allowed:

• Transferring a Cash ISA from Provider A to Provider B – This is an ISA transfer, not a new ISA.

• Transferring last year’s Stocks & Shares ISA to a new provider – Does not count towards your ISA allowance.

Not Allowed:

• Paying into two Cash ISAs in the same tax year – You can transfer ISAs, but you cannot contribute to multiple ISAs of the same type in the same year.

What Types of ISAs Can I Transfer?

You can transfer any type of ISA to another provider, but certain rules apply.

• Cash ISA → Cash ISA is allowed

• Cash ISA → Stocks & Shares ISA is allowed

• Stocks & Shares ISA → Cash ISA is allowed

• Lifetime ISA → Another Lifetime ISA is allowed (must transfer full balance)

• Lifetime ISA → Cash ISA / Stocks & Shares ISA is not allowed (unless subject to withdrawal penalties)

• Junior ISA → Junior ISA is allowed (full transfer required)

You can transfer ISAs from previous years freely, but current-year contributions must be transferred in full.

What Are ISA Transfer Rules and Limitations?

• Always use the ISA transfer process – Do not withdraw funds yourself, or you lose the tax-free status.

• You can transfer previous years' ISAs freely without affecting your annual allowance.

• If transferring an ISA from the current tax year, you must transfer the full balance.

Do ISA Transfers Count Towards Your Annual Allowance?

• No, ISA transfers do NOT count towards your £20,000 annual allowance.

• If you transfer a £50,000 ISA from a previous tax year, this does not affect your new £20,000 allowance.

• If you transfer an ISA within the same tax year, you must move the full amount.

Why Would I Transfer an ISA?

• Better Interest Rates – Moving from a low-interest Cash ISA to a higher-paying provider.

• Lower Fees – Some Stocks & Shares ISAs charge lower fees than others.

• Improved Investment Choices – Different ISA providers offer different funds and stocks.

• Combining ISAs – Managing multiple ISAs in one place for simpler account management.

Final Thoughts

• Transferring an ISA does NOT count as opening a new ISA.

• You can transfer any type of ISA, but Lifetime and Junior ISAs have stricter rules.

• ISA transfers do not count toward your £20,000 annual allowance.

• Always use an ISA transfer form to keep your tax-free benefits.

For more information on ISA transfers, visit GOV.UK.