Changes to ISAs

saajan_12

https://forums.moneysavingexpert.com/discussion/comment/81916134#Comment_81916134

No, and your replies suggest you're misunderstanding how the limits work.

1. Anything that is currently in an ISA can be transferred to another ISA regardless of amount or type, BUT this must be done by the provider, do not DIY it. The process is you open the new ISA, then tell <New_ISA_Company> to request the money from <Old_ISA_Company>.
   
   1. From April 2027, you can't move as freely between different types of ISA, but within the same type you can still leave or transfer CashISA→CashISA etc.
      
2. Every year you can put 20k new money from a normal account to an ISA account. This does not affect transfers of money that's already in an ISA.
   
   1. From April 2027 the 20k is split into upto 12k in a Cash ISA and the rest in S&S. Again this does not affect transfers of existing ISA money.

jimjames

https://forums.moneysavingexpert.com/discussion/comment/81919169#Comment_81919169

Yes that is entirely possible if you;'ve not already used this year's ISA allowance (or the ISA is flexible)

Yorkie1

https://forums.moneysavingexpert.com/discussion/comment/81919169#Comment_81919169

When did that £40K get paid into the existing ISA? Was any of it since 6 April 2025?

vikkimcd

No, it was before April 2025.

FrugaiMacDugal

So am I right in thinking I could withdraw the £40k to my current account, put £20k into the Trading 212 cash ISA now, then the other £20k in after April 6th? If I just do a transfer of the whole lot, the rate is lower.

No, you are wrong, if you withdraw to your current account you lose the ISA tax free wrapper.

You can transfer the whole £40k now, plus interest but must get your new provider to initiate the transfer.

vikkimcd

Sorry, another user has said this is possible - what is meant by the wrapper? I do not understand how this would not work, as I would be transferring £20k in two separate financial years?

FrugaiMacDugal

What it means is if you withdraw to your current account then it is out of the ISA 'wrapper' so you will lose the tax free status.

masonic

https://forums.moneysavingexpert.com/discussion/comment/81922946#Comment_81922946

This is incorrect. The OP has indicated she has not used her 2025/26 allowance and at this late stage potentially will not, but for this transaction. She can withdraw £20k to her bank account, pay it into a Trading212 cash ISA and secure the higher interest rate and the money will still be ISA-wrapped. If she does not need to use her 2026/27 ISA allowance for anything else, she can withdraw another £20k on or after 6th April and do the same. That will be £40k in a cash ISA at a promotional rate secured before any further restrictions are placed on the cash ISA allowance. Any further money added to an ISA would need to wait until 2027/28 and be subject to a £12k cash ISA limit.

The alternative is to use the ISA transfer process and miss out on the promotional rate of interest. This would only make sense if there was a need to move extra money into ISAs over the next year and a bit.

FrugaiMacDugal

Ok, thanks.

Though is it not better to transfer rather than withdraw, to build up an ISA kitty?

masonic

https://forums.moneysavingexpert.com/discussion/comment/81923960#Comment_81923960

It really depends on what you are able to save in new money. If you are not building up your ISA then it makes no difference and securing a higher rate wins. If you are actively saving and using the allowance each year then obviously preserving the allowance wins.

In early retirement I'll be running down my ISAs first, so will likely not use any of my allowance in those years. Whereas right now I prioritise filling ISAs with new money.