Once you have chosen a New Isa for a client, Anna Bowes, financial adviser and director of London-based Savings Champion, says there is a golden rule to be aware of when transferring: never simply cash in the Isa, as doing so will mean the allowance is lost forever.
Instead Ms Bowes says you or your client need to complete the new provider’s transfer form, and then let them move the funds.
She says: “If you are looking to move past tax years’ Isas, you can transfer either some or all to your new provider, depending on the terms and conditions, as some providers will not allow partial transfers.
“If they do, you could even transfer different amounts to different providers and types of cash Isa – i.e. fixed and variable.
“In the old days, these transfers could sometimes take months to happen. However since January 2011, the guidelines state that cash Isa transfers should take place within 15 business days of the transfer instruction being received by the new Isa provider, unless there are reasons for this 15 day deadline to start later, for example if notice has to be given, or the maturity date has not yet been reached.
“It always makes sense to check what penalties might apply if you do look to transfer, especially if it is a notice or fixed rate account.”
Peter Rogerson, savings and mortgages director of Virgin Money, says fixed rate Cash Isas usually charge an interest penalty to transfer funds out before the maturity date. Similarly some Isas require a notice period to transfer funds out charge-free, Mr Rogerson adds.
When selecting a new Isa account, Mr Rogerson says it is important to check whether the account accepts ‘transfers in’ of previous years Isa subscriptions, as not all accounts do.
Mr Rogerson says: “To ensure people make the most of their money, it is important to regularly review their savings to check they are earning a competitive rate of interest. If they are not, a transfer to a Nisa account could improve returns for them.
“One thing to remember with both Isas and Nisas is that in order to protect the tax-free position of the savings, people should always talk to their provider about transferring money to a new account rather than simply withdrawing it from one account and depositing it in a new one.”
