ISA to LISA Question

jimmyg_73

What is the best method of moving money from an Adult ISA to a LISA? Is it possible to transfer directly - or must the money be withdrawn from the ISA and put into the LISA?

eskbanker

Up to £4K can be moved into a LISA in any tax year, either directly (where the provider supports inward transfers) or indirectly (if sufficient annual ISA allowance available).

PRAISETHESUN

Don't withdraw the money yourself as it will lose it's tax-free status and will count towards your annual ISA limit when you deposit it into your LISA. Always use the ISA transfer process. AFAIK, you should be fine to transfer £4k from a cash ISA into a cash LISA.

WillPS

PRAISETHESUN said:

Don't withdraw the money yourself as it will lose it's tax-free status and will count towards your annual ISA limit when you deposit it into your LISA. Always use the ISA transfer process. AFAIK, you should be fine to transfer £4k from a cash ISA into a cash LISA.

Worth noting that currently the 4 most competitive LISAs (Moneybox, Tembo, Paragon and Beehive) only support transfers from other LISAs. If OP is using up all their ISA allowance, it might make sense to go with a provider paying less interest who will support ISA transfers (Skipton is currently best at 3.25%) - but otherwise it's highly likely they'll be better off forgoing previous years allowances and taking the extra 1-1.5% interest.