How do ISA Transfers Work?
How do ISA transfers work?
If you’re looking to transfer your ISA, you’ve possibly come across a range of ISA options and providers. This can make the whole process seem a bit confusing and finding the best option can be tricky. What’s more, interest rates can vary hugely – or in the case of cash ISAs, be very underwhelming. There’s no need to suffer meagre interest rates or expose your money to the risks of stocks and shares ISAs. You can transfer your existing ISA to an alternative provider – so long as you understand the correct procedures you could stand to benefit significantly. But how do ISA transfers work?
What is an ISA transfer?
Before we help you figure out how to transfer your ISA, you need to understand exactly what an ISA transfer is. Simply put, it’s when you move your ISA savings or investments from one provider to another – or to a different type of ISA – and continue building up your tax-free savings or investments. An important point to know is that ISA transfers are not limited to the current tax year. That said, if you transfer from the current year’s ISA then you have to move all the existing money. If you transfer money from previous years’ ISAs, you can choose to transfer all or part of it. You can transfer money from a cash ISA into another cash account or into a stocks and shares ISA – and vice versa.
Depending on your type of ISA and provider, you can do a transfer at any time. Not all providers accept transfers, so be sure to check. Once that’s clear, the transfer process has to follow specific guidelines – you can’t withdraw the money as cash, for example, otherwise your ISA will no longer be tax-free. A correctly administered ISA transfer is a simple process and should not take longer than 15 to 30 working days to complete. A transfer between cash ISAs will take less time than other types of transfers but if yours exceeds one month, then it’s best you check in with your ISA provider.
Why transfer your ISA?
The reasons for transferring an ISA vary from person to person, but are all relatively straightforward. It all comes down to one simple question: is your ISA giving you the best bang for your buck in the most convenient way possible? If you aren’t happy with your existing ISA rate, especially when you consider the low risk and paltry returns of cash ISAs and the high risk of volatile stocks and shares ISAs, then a transfer is worth looking into.. Or perhaps you’d like to consolidate your ISAs with a single provider to make it easier to manage?
If one, or all, of those reasons resonate with you, then you might want to transfer your ISA to an Innovative Finance ISA (IFISA).
Understanding the IFISA
An IFISA expands an investor’s ISA options beyond the traditional cash ISA and stocks and shares ISA options. It allows investors to invest their ISA allowances through FCA regulated peer to
peer lending platforms and receive tax-free gains in return.
How does it compared to more traditional ISAs? The peer to peer lending ISA offers better rates than cash ISAs whilst simultaneously avoiding the volatility of the stock market. However, as with most investment options, it does present some risk and is therefore more comparable to a stocks & shares ISA than to a cash ISA. Its best that investors diversify their portfolios to protect their money from possible downturns.
At The House Crowd, our secured peer to peer lending platform lends money in the form of loans to property owners and developers. We secure the investors’ capital via a legal charge over the underlying property asset.
How to transfer your ISA to The House Crowd’s IF ISA
The House Crowd’s Innovative Finance ISA can earn you 7%* interest per annum tax-free on an investment of up to £20,000, over a minimum investment period of three years. Your investment is automatically diversified across a portfolio of our bridging and development loans, helping you to spread your risk. It’s a simple process to transfer your existing ISA to our IFISA – but you have to transfer at least £1,000 worth of investment. If you transfer between £1,000 and £4,999 there will be an admin charge of £50. Transfers of £5,000 and over are free of charge.