Cash ISA Transfer (Pre maturity)

Peka

I have put £20k ISA for 2022-23 with Santander in their 2 year fixed rate back in April. Interest rates have gone up and I wanted to check if I can transfer (not withdraw) out to another provider with higher rates.

The terms from Santander state - "We’ll charge you a fee equal to 120 days’ interest if you do. This ISA isn’t flexible. That means if you take money out, it will lose its tax-free status. If it’s repaid into an ISA, it’ll count towards your ISA allowance for the current tax year."

I understand the 120 days interest penalty but will I also lose my ISA allowance for this year (2023-24) since it is not a flexible ISA? Can someone confirm if this is the correct reading of their terms, if so, is it permitted by the regulator?

Doctor_Who

Peka said:

I have put £20k ISA for 2022-23 with Santander in their 2 year fixed rate back in April. Interest rates have gone up and I wanted to check if I can transfer (not withdraw) out to another provider with higher rates.

The terms from Santander state - "We’ll charge you a fee equal to 120 days’ interest if you do. This ISA isn’t flexible. That means if you take money out, it will lose its tax-free status. If it’s repaid into an ISA, it’ll count towards your ISA allowance for the current tax year."

I understand the 120 days interest penalty but will I also lose my ISA allowance for this year (2023-24) since it is not a flexible ISA? Can someone confirm if this is the correct reading of their terms, if so, is it permitted by the regulator?

You can transfer the ISA from 2022-23 (and pay the penalty fee) and this does not affect your ISA allowance (£20K) for 2023-24. Use the MSE ISA calculator to see if it's worth transferring and paying the penalty fee:

https://www.moneysavingexpert.com/savings/isa-switch-calc/