Cash ISA Transfers: How to Switch Without Losing Tax Protection

Moving a Cash ISA to a better-paying provider is routine, and the rules are designed to make it painless. But there is one mistake that turns a simple administrative task into a permanent loss of tax protection, and it is the most intuitive thing to do: withdrawing the money yourself.

Understanding why that fails, and what to do instead, is the whole of this guide.

Never withdraw money to move a Cash ISA. Withdrawing ends its tax protection permanently, and re-depositing counts as a new subscription against this year's £20,000 allowance.

Instead, apply to the new provider and complete their ISA transfer form. They collect the money from your old provider, the funds never leave the ISA wrapper, and none of your allowance is used.

Never withdraw money from an ISA in order to move it.

Money inside an ISA is protected from Income Tax and Capital Gains Tax indefinitely. The moment you withdraw it, that protection ends. Paying it into a new ISA does not restore it — the deposit is treated as a brand-new subscription, which means:

• It consumes part of your current-year £20,000 ISA allowance
• If the amount exceeds your remaining allowance, the excess cannot go into an ISA at all
• Years of accumulated tax-free savings can be stripped of protection in a single afternoon

Someone with £60,000 built up across several years who withdraws it to chase a better rate can shelter at most £20,000 of it. The other £40,000 becomes ordinary taxable savings, permanently.

The correct route is a transfer, where the money moves provider to provider without ever leaving the ISA wrapper. A transfer does not count as a subscription and does not touch your allowance.

The process is initiated with the new provider, not the old one. This is counterintuitive and is where people go wrong.

1. Open or select the receiving ISA. Check it accepts transfers in — not all do, and some accept transfers only at account opening.
2. Complete the receiving provider's ISA transfer form. You supply your existing provider's details, the account number, and how much you want to move.
3. The new provider contacts the old one and requests the transfer under the ISA Regulations.
4. The old provider releases the funds and the receiving provider credits your account.

You do not need to contact your existing provider yourself, and you should not close the old account first. Closing it before the transfer request arrives is functionally the same as withdrawing.

Industry practice for a Cash ISA to Cash ISA transfer is that it should complete within a small number of working days once the request is made. Transfers involving investments take longer, because assets may need to be sold or re-registered.

Interest treatment during the transfer varies by provider. Some pay interest up to the transfer date; some have a gap where money is in transit and earning nothing. Over a few days the amount is small, but check if you are moving a large balance.

If a transfer stalls well beyond the expected window, raise it with the receiving provider first, since they are managing the request, then complain formally if it is not resolved. Persistent delays can be escalated to the Financial Ombudsman Service.

The ISA Regulations treat these differently, and it affects how much flexibility you have.

Previous tax years' money can be transferred in whole or in part. You can move £10,000 of a £40,000 balance built up over several years and leave the remainder where it is.

Current tax year subscriptions could once only be moved as a single block. That changed on 6 April 2024: partial transfers of current-year subscriptions are now permitted under the ISA Regulations.

The catch is that permitted is not the same as available. Providers are not obliged to offer partial transfers of current-year money, or to accept them. Where a provider does offer it, that will be set out in the account terms and conditions. So a saver wanting to move only part of this year's subscription may still be told no — but by the provider's policy, not by the rules.

Either way, be explicit with the receiving provider about which portion is current-year and which is from previous years. Providers ask, and getting it wrong causes the transfer to be rejected or repaired later.

You are not limited to Cash ISA to Cash ISA. You can transfer:

• Cash ISA to Stocks and Shares ISA
• Stocks and Shares ISA to Cash ISA
• Either into a Lifetime ISA, subject to the £4,000 annual LISA cap
• Innovative Finance ISA to other types

Transferring into a Lifetime ISA is the one to think carefully about, because money entering a LISA becomes subject to the 25% withdrawal charge if taken out other than for a qualifying first home purchase, after age 60, or on terminal illness grounds. Our guide on moving a Lifetime ISA between providers covers LISA-to-LISA transfers, which do not trigger the charge.

Withdrawing to "move it yourself." The central error. It ends tax protection permanently.

Closing the old account first. Same effect as withdrawing.

Assuming the new account accepts transfers. Many headline-rate accounts are for new money only. Confirm before opening.

Missing a fixed-rate exit penalty. Transferring out of a fixed-rate ISA before maturity usually triggers an interest penalty under the account terms, exactly as breaking a fixed-rate bond early does. The transfer is permitted; the penalty still applies.

Assuming you can split current-year money. Partial transfers of current-year subscriptions have been permitted since 6 April 2024, but no provider has to offer them. Check the terms before planning around it rather than after.

Chasing a rate that has already gone. Check the receiving rate is still available to transfers in, not just to new subscriptions.

Looking for more on this topic? Browse all our savings guides.

This guide is based on UK primary legislation, regulator handbooks, and official guidance. The following sources cover the rules described above:

• Individual Savings Account Regulations 1998
• HM Revenue & Customs
• FCA Handbook — BCOBS (Banking: Conduct of Business)
• Financial Ombudsman Service

Free, impartial money guidance is available from MoneyHelper, the government-backed service run by the Money and Pensions Service.

Related: ISA Allowance: How the £20,000 Limit Works | Moving a Lifetime ISA Between Providers | All savings guides.