Guidance

Transfer an ISA if you're an ISA manager

Find out when you can transfer an ISA and what information you need to provide to the new ISA manager.

Transferring an ISA

Investors have the right to transfer their ISAs whenever they want and this right must be included in the manager’s ISA terms and conditions.

They do this by making a transfer application to the new manager, they cannot transfer an ISA by closing it and paying the proceeds into a new ISA with the new ISA manager. Where this occurs in respect of a Lifetime ISA not only will the tax wrapper be removed but it will also be treated as a withdrawal and may be liable to a withdrawal charge. A transfer application can be made by someone holding a mandate from the investor.

Transfer rights in relation to non-cash innovative finance ISA investments are available only as set out in the terms and conditions of the account. There are no restrictions on pre 6 April 2016 funds held in cash, and stocks and shares ISAs being transferred to innovative finance ISAs after 5 April 2016.

Pre 6 April 2017 funds held in cash ISAs, stocks and shares ISAs, and cash held in innovative finance ISAs may be transferred to Lifetime ISAs after 5 April 2017; with the caveat that the amount transferred must not cause the Lifetime ISA current year payment limit to be exceeded. For treatment of the transferred amount in respect of the government bonus please refer to the guidance on Lifetime ISAs.

However, ISA managers are not obliged to accept transfers in.

From 6 April 2016 subscriptions can be transferred freely between cash, stock and shares, and innovative finance ISAs.

From 6 April 2017:

  • subscriptions to a Lifetime ISA may be transferred to cash, stocks and shares and innovative finance ISAs but will be treated as a withdrawal and may be liable to a withdrawal charge

  • subscriptions to a Lifetime ISA may be transferred between Lifetime ISAs without incurring a withdrawal charge

  • funds held in cash ISAs, stocks and shares ISAs, and cash held in innovative finance ISAs may be transferred to Lifetime ISAs; with the caveat that the amount transferred must not cause the Lifetime ISA payment limit to be exceeded

From 1 July 2014 – 5 April 2016:

  • for treatment of the transferred amount in respect of the government bonus please refer to the guidance on Lifetime ISAs
  • subscriptions to a stocks and shares ISA could be transferred to either a stocks and shares ISA, or a cash ISA
  • subscriptions to a cash ISA could be transferred to either a cash ISA, or to a stocks and shares ISA

Until 30 June 2014:

  • subscriptions to a stocks and shares ISA could only be transferred to another stocks and shares ISA
  • subscriptions to a cash ISA could be transferred to either a cash ISA, or to a stocks and shares ISA

The terms of a transfer should be agreed between the investor and both ISA managers.

Where an ISA is transferred all the tax benefits are preserved.

Investments and/or cash transferred are not new subscriptions for the purposes of the overall subscription limit. However, investments and/or cash transferred into a Lifetime ISA may receive a government bonus and may count to the Lifetime ISA payment limit. For treatment of the transferred amount in respect of the government bonus please refer to the guidance on Lifetime ISAs.

Subject to the ISA terms and conditions of both ISA managers, the old manager may transfer:

  • the ISA investments, in which case the new manager must re-register the investments in accordance with his terms and conditions (refer to ISA terms and conditions)
  • cash
  • any combination of the above

ISA managers must transfer investments and/or cash direct to new ISA managers. If the investments and/or cash are transferred to the investor, this will be treated as a withdrawal (see guidance on subscription limits) and in the case of funds withdrawn from a Lifetime ISA, may be liable to a withdrawal charge.

ISA managers must keep a record of ISAs they transfer out, including the original or a certified copy of the application(s) to subscribe or in the case of applications not in writing, the declaration made by the manager (see guidance on applications not in writing, for three years after the date of transfer.

What amounts can be transferred?

An Investor must either do one or both of the following:

  • transfer all of the current year’s ISA subscriptions, the investments bought with those subscriptions, and any income arising on those investments (current year account)
  • transfer some or all of the previous years’ ISA subscriptions, the investments bought with those subscriptions, and any income arising on those investments (prior years account)

In the case of an innovative finance ISA this means that a transfer of the cash is not possible unless all the current year subscriptions are transferred i.e. by liquidating the peer-to-peer loans and crowdfunding debentures or transferring ‘in specie’.

In the case of a transfer of current year’s Lifetime ISA to another Lifetime ISA the government bonus must also be transferred.

The above rules apply to previous and current year payments made to a Lifetime ISA in the same way as they do to current year subscriptions.

Where current year subscriptions are transferred they must be transferred in whole (including any related income), and are treated for all ISA purposes as if they had been made to the receiving ISA manager.

In the case of a transfer of current year payments in a Lifetime ISA to another Lifetime ISA the government bonus must also be transferred.

The above rules apply to current year payments made to a Lifetime ISA in the same was as they do to current year subscriptions.

This means that the investor is regarded as never having subscribed to the original ISA so, subject to the annual subscription limits the investor may subscribe to another ISA of the type that has been transferred later in the current year (with the same or a different manager) without breaching the one ISA of each type a tax year rule.

In the case of transfers of current year subscriptions from non-Lifetime ISAs to Lifetime ISAs, only subscriptions (including any related income) which do not cause the Lifetime ISA payment limit to be exceeded may be transferred.

For information on how to treat transfers to Lifetime ISAs please see the table (PDF, 195KB, 2 pages) showing treatment of different types of subscriptions and payments into a Lifetime ISA.

Further information on reporting such transactions is available in annual returns of information.

If the investor has requested that the current year account be transferred, and that account can be identified, the whole of the current year account must be transferred.

If the investor has requested that the current year account be transferred, but that account cannot be identified, it may be regarded as cash and investments whose total value is anywhere between two limits. The two limits are:

  • the total amount subscribed in the current year plus a reasonable apportionment of any income arising on that subscription (upper limit)
  • the total amount subscribed in the year less withdrawals in the year, (lower limit). If the withdrawals exceed subscriptions the lower limit is £nil

If the total value of the cash and other investments held in the ISA are less than the lower limit, then all the cash and investments count as current year.

Where an investor wants to transfer all or part of the prior year account, the manager should calculate the lower limit, and subtract that from the total value of the investments and cash in the ISA. Some or all of the remainder can be transferred as a prior years account.

If the total value of the cash and other investments held in the ISA is less than the lower limit, all investments and cash held must be treated as a current year account and there is no prior years account to transfer.

See worked examples of what amounts can be transferred (PDF, 202KB, 3 pages) .

Transfer applications

Unless the ISA is being transferred into an existing ISA with the new ISA manager, investors must make a transfer application to the new ISA manager when requesting a transfer.

This can be achieved by asking the investor to complete:

  • a transfer authority form (which is not a requirement of the ISA regulations), which the new ISA manager forwards to the old ISA manager and authorises him to transfer the ISA (or part of it) to the new ISA manager
  • an ISA application form or a transfer instruction

A transfer instruction should include the appropriate authorisation to hold the ISA investments etc. and agreement to the manager’s ISA terms and conditions. However, it is not required to include the investor’s date of birth or national insurance number (NINO), or any of the ISA declarations. This can be completed by someone holding a mandate for the ISA investor, there is no requirement for the investor to be incapable of completing the transfer instruction.

The transfer is initiated by an approach to the new ISA manager.

If the new manager already holds an ISA for the investor into which the transfer will be made, a person holding a mandate to operate the account can request that the funds are moved into that account (as an application to open the account is not required). Subscriptions can be made following the transfer if the manager holds an application form that is still valid.

If the transfer requires a new account to be opened and the investor wishes to subscribe to the account, an application made by the investor or someone holding a registered lasting power of attorney to open the account will be needed.

If the investor is transferring ISA savings and does not wish to make any further subscriptions to the new account, the transfer can be processed by a person holding a mandate to operate the account. But the new ISA manager cannot accept subscriptions without an application completed by the investor or a person holding a registered lasting power of attorney.

The ISA application form or transfer instruction can be made via the application not in writing process. However, it is possible that the old ISA manager will require the transfer authority form to be signed by the investor before he will agree to release the funds. This is something for managers to resolve – the ISA regulations do not do away with the requirement for a signature if one is required by the old manager’s terms and conditions.

Internal Transfers

A transfer application is not required where an existing ISA investment is switched from one product to another (which is what happens on the maturity and ‘roll-over’ of a fixed-term product), but the existing ISA continues (with either the same or a new account number). However, an ISA application form must be obtained where all the following apply:

  • the investor is eligible to subscribe to the ISA after the transfer (the residence condition is satisfied)
  • the investor intends to subscribe to the ISA after the transfer
  • the existing application form is no longer valid (see applications to subscribe to an ISA)

But a transfer application is required where one type of ISA is transferred to another type, for example where a stocks and shares ISA is transferred to a cash ISA, and the investor intends to subscribe following the transfer. The guidance at transfer applications refers.

Cash ISA Transfers

Cash ISA to cash ISA transfers must take place within 15 business days of the transfer instruction being received by the new ISA manager, unless the investor stipulates that the 15 days starts on a later date. This 15 days is broken down as follows:

The new ISA manager has 5 business days to forward the instruction to the old ISA manager.

The old ISA manager has 5 business days in which to send the funds and information to be provided to the new ISA manager.

The new ISA manager has 3 business days to apply the funds to the new ISA.

The other two days are to allow for time taken for first class post between managers.

This timetable does not apply to cash ISA to stocks and shares, innovative finance or Lifetime ISA transfers or to stocks and shares, innovative finance or Lifetime ISA to cash ISA transfers. Managers should complete such transfers in accordance with their ISA terms and conditions.

Guidance has been produced by the industry on best practice for stocks and shares ISA to cash ISA transfers. While we recommend that managers adopt these procedures, they are recommendations only and are not prescriptive. The guidance and specimen transfer authority are available at:

If the old ISA is a notice account or a fixed-term product the investor may suffer an exit penalty or interest penalty if the funds and transfer history form are sent to the new manager within 5 business days. If the old manager contacts the investor and receives a revised instruction to transfer the ISA once the notice period has expired, or the product has matured, this will be treated as new transfer instruction that restarts the timetable once the notice period has expired, or the product has matured.

Appendix B (PDF, 364KB, 9 pages) contains guidance produced by the industry on best practice for cash ISA to cash ISA transfers. While we recommend that managers adopt these procedures, they are recommendations only and are not prescriptive. However, the timetable above must be adhered to.

Information to be provided to the new ISA manager

The old ISA manager must give the new ISA manager a notice in writing containing information about the ISA being transferred using a transfer history form.

The information can be given electronically and need not have a ‘wet’ signature.

Where the transfer is a bulk transfer the information must be provided at the time of the transfer. In cases where the investor initiates the transfer the information must be provided within 30 days after the transfer.

Where the old ISA manager does not send the transfer history form to the new ISA manager when transferring the ISA he should:

  • notify the new ISA manager of the type of ISA (cash, stocks and shares, innovative finance, or Lifetime ISA) and the amount transferred
  • send the transfer history form to the new ISA manager within 30 calendar days of the date of transfer

Transfer history forms

You can download model transfer history forms or the ISA manager may use their own transfer history forms. However, they must contain the same information as the HMRC model forms.

Transfer history forms should be completed as follows:

Full name

ISA managers should enter the forename(s) or the first name and initial, and the surname of the investor.

Full permanent residential address

ISA managers should enter the full residential address of the investor. If, exceptionally, the investor’s current permanent residential address is not known, ISA managers should report the last address held. “Care of” or other correspondence addresses are not permitted. But where the address is a retirement home, nursing home, hospice or hospital, this address can be used. British Forces Post Office addresses can also be used. In respect of Lifetime ISAs the investor’s current permanent address must be provided.

Postcode

ISA managers should enter the full postcode of the investor.

Date of birth

This should be reported in the format DDMMYYYY.

The date of birth of an investor born on 3 June 1932 should be reported as 03061932. If only the year of birth of the investor is known ISA managers should report 01011932. In respect of Lifetime ISAs the investor’s full date of birth must be reported.

National insurance number (NINO)

This should be in the format QQ123456C. The final character, which will always be A, B, C or D, is not critical and ISA managers may omit it if not known.

If the investor does not have a NINO, this entry should be left blank unless the ISA manager’s system requires the capture of a NINO. In that case the “universal dummy NINO” – XX999999X – should be used. ISA managers must not use any other dummy or substitute NINO.

In respect of Lifetime ISAs the investor’s full NINO must be reported – it is not acceptable to not provide this information or to use the universal dummy NINO.

Account number

ISA managers must enter the account number from their own records. In the case of a Lifetime ISA being transferred this must be the same number that was previously used to report the account to HMRC.

Type of ISA

ISA managers must enter either:

  • “A” if current year subscriptions are being transferred
  • “X” if current year subscriptions are not being transferred

Where a flexible ISA is being transferred with net current year subscriptions of £nil and a valid date of first subscription, the ISA manager should enter “A”.

Date of transfer

This should normally be the date of which the new manager agrees to accept the transfer. It should be reported in the format DDMMYYYY.

Amount transferred

Enter the total amount of cash being transferred.

If any investments are being transferred in specie attach a list and tick the box.

Current year subscriptions

This box should be completed only where current tax year subscriptions are being transferred (“A” is entered in the type of ISA box).

Where a non-flexible ISA is transferred enter the total amount subscribed to the ISA in the current tax year (disregarding any additional permitted subscriptions following the death of account holder, defaulted subscriptions including defaulted investment subscriptions and Help to Buy ISA reinstatement subscriptions).

If the ISA is a stocks and shares ISA, include any subscription made via the direct transfer of shares from a schedule 3 save as you earn (SAYE) option scheme, an approved profit-sharing scheme or a schedule 2 share incentive plan (SIP) in the total box and also report it separately in the share scheme transfers box.

Where a flexible ISA is transferred, the old manager must provide the new manager with the ‘net’ subscriptions in the current year. That is, the total subscriptions in the year (disregarding any additional permitted subscriptions following the death of account holder, defaulted subscriptions including defaulted investment subscriptions and Help to Buy ISA reinstatement subscriptions), less any amounts withdrawn. Where withdrawals equal or exceed the amounts subscribed a £nil figure should be provided.

In respect of the transfer of a Lifetime ISA the following must also be included in the notice:

  • the amount of government bonus that has been paid within the current year
  • the amount of government bonus that has accrued but not yet been claimed or paid at the date of the transfer
  • details of any qualifying additions for which a claim has not yet been made but with separate entries in respect of:
    • a Help to Buy ISA transfer where stating funds transferred with a balance as at 5 April 2017
    • a Help to Buy ISA transfer where stating funds transferred not including those transferred and included above
    • any other qualifying additions

Share scheme transfers

This box should be completed only where:

  • the ISA is a stocks and shares ISA or a Lifetime ISA
  • current tax year subscriptions are being transferred (“A” is entered in the type of ISA box)
  • the current year subscription includes shares transferred from a schedule 3 SAYE option scheme or a schedule 2 SIP

Enter the market value of the shares at the date on which they were transferred into the ISA.

If the transfer is from a stocks and shares ISA to a cash ISA, the receiving cash ISA manager can ignore the entries made here as they do not need to include the details on their annual ISA return.

Date of first subscription in current year

This box should be completed only where current tax year subscriptions are being transferred (“A” is entered in the type of ISA box).

Enter the date on which the first subscription was made in the tax year of transfer. It should be reported in the format DDMMYYYY.

Where a Flexible ISA is transferred, the date is that of the first subscription in the current year that counts towards the subscription limit. That is, the first subscription that is not a replacement of amounts previously withdrawn in the year. additional permitted subscriptions, defaulted subscriptions including defaulted investment subscriptions and Help to Buy ISA reinstatement subscriptions, should be ignored for this purpose.

Where the net current year subscriptions are £nil, and managers are unable to override the BACS default date of first subscription of 6 April, the transfer should proceed using the default date of 6 April.

The BACS system has a default date of first subscription of 6 April where current year subscriptions are £nil. Where managers systems are unable to override the default date, transfers made in 2017-18 should proceed using the 6 April default date. Managers must make the necessary systems changes for later years.

Where a manager receives a BACS transfer in 2017-18 showing a date of first subscription of 6 April and current year subscriptions of £nil, the manager should not capture or report the 6 April date of first subscription. For later years, the date should be captured and reported.

In respect of Lifetime ISAs the notice must also give the date of first payment into the account in the year of transfer; other than either:

  • defaulted Lifetime ISA subscriptions
  • a returned withdrawal from a Lifetime ISA following a failed first time residential purchase

See worked examples of flexible ISA subscriptions (PDF, 193KB, 1 page) .

Date of which the Lifetime ISA was opened

Where the account transferred is a Lifetime ISA the notice must also give the date on which that Lifetime ISA was first opened. In respect of either:

  • defaulted Lifetime ISA subscriptions
  • a returned withdrawal from a Lifetime ISA following a failed first time residential purchase

The date on which the Lifetime ISA was opened (if opened for the purpose of receiving such payment) is to be treated as being the same Lifetime ISA from which the original payment originated.

Withdrawal for a first time residential purchase

Where the account transferred is a Lifetime ISA the notice must also confirm whether or not there has been a withdrawal for a first time residential purchase.

If so it must also confirm whether any of the information required from the conveyancer declaration remains outstanding and if so it must also contain an undertaking to pass onto the new ISA manager without delay.

Date of Transfer

When either type of ISA is transferred, the two ISA managers must agree a common transfer date. Unless otherwise agreed, this will be the date included in the ‘transfer acceptance’ section of the ISA transfer authority form and, if the transfer is a Cash ISA, the Cash ISA model form at Appendix B (PDF, 364KB, 9 pages) .

The transfer date establishes:

  • the date from which the new ISA manager can accept subscriptions
  • which ISA manager is responsible for including details of the transferred ISA in its Lifetime ISA claims and/or ISA annual returns

The new ISA manager may accept subscriptions from the date of transfer (provided he holds a valid ISA application form).

Where an ISA transfer straddles the end of a tax year:

  • the ISA is included in the new manager’s annual returns if the transfer date is 5 April (or earlier)
  • the ISA is included in the old manager’s annual returns if the transfer date is 6 April (or later)

See worked examples of transfer dates (PDF, 110KB, 1 page) .

Income received by the old manager after the date of transfer

Any income received by the old ISA manager after the date of transfer should be sent to the new ISA manager unless either:

  • the old manager has been instructed to pay income received to the investor
  • the income received is less than the minimum the new manager is prepared to accept

Where this includes a government bonus in respect of a Lifetime ISA this must be forwarded directly to the new ISA manager. Any departure from this requirement may result in a withdrawal charge being due.

Information to be provided to the transferring manager by the new manager

Where the account being transferred is a Lifetime ISA, the new manager must confirm to the old manager the type of ISA that the account is being transferred to. Where the new account is not a Lifetime ISA, the transferred amounts will be treated as having been withdrawn from the Lifetime ISA, and may be subject to a withdrawal charge, which should be deducted by the transferring manager prior to transferring the funds.

Bulk transfers

A bulk transfer takes place where either:

  • two managers agree to transfer two or more accounts between them without the agreement of the account investors; for example where an ISA manager has decided to rationalise or reorganise his ISA book by selling some or all of it to another manager
  • the transfer takes place under an insurance business transfer scheme or a banking business transfer scheme under part 7 of the Financial Services and Markets Act 2000 (FSMA)

Before making a bulk transfer, the manager must notify HMRC and the investors whose accounts are being transferred. The notice must:

  • specify the first day on which accounts will be transferred under the bulk transfer
  • be given at least 30 days before this date
  • provide the name and address of the manager who will receive the accounts

In addition, the notice to investors must:

  • identify the account being transferred
  • advise that the investor can arrange a transfer to a manager of their choice if they supply instructions by a certain date
  • specify what the date is for receiving those instruction

Where the manager will cease to offer ISAs after the bulk transfer he must ensure the final returns are made so that HMRC records can be closed – see ‘ceasing to be a manager‘.

When making a bulk transfer, the old manager need not complete separate transfer history forms for each ISA being transferred. Instead they may give the new manager a schedule that contains the information that would normally be entered on the transfer history forms.

Where managers adopt this approach they must also send a covering notice to the new ISA manager. This notice should identify the ISAs being transferred by referring to the accompanying schedule.

If the transfer takes place to an existing account held with the new manager, the investor can make further subscriptions to the account if the application form held by the new manager for that account is still ‘valid’ see applications to subscribe to an ISA.

If the transfer is made to a new account, the new ISA manager can only accept subscriptions to that account if an application form has been given to the new manager and that application is ‘valid’.

Where subscriptions were being made to the old manager by direct debit, the new manager cannot collect payments under that direct debit until he holds a valid application form. He may accept the money on a provisional basis but if a completed application form is not received within 30 days the manager must void the subscription and remove the investments purchased with it from the ISA. Alternatively, the manager could place the money in a suspense account until a fully completed application is received.

Group Transfers

A ‘group transfer of accounts’ is a bulk transfer that takes place between members of a 75% group of companies – i.e. where one of the companies is a 75% subsidiary of the other or both are 75% subsidiaries of a third company.

Following a group transfer or a bulk transfer of accounts under Part 7 of FSMA, the new manager can accept subscriptions to the account if:

  • the most recent application held by the old manager is available to the new manager
  • that the application to subscribe to an ISA is still ‘valid’

The application is available to the new manager if it (or a copy) has been passed to the new manager or if the new manager could require it to be made available to him. The old manager will need to confirm to the new manager that there has not been a gap year where no subscriptions have been made.

An intra-group transfer can include cases where the manager has accepted an application (usually on-line) but is still awaiting the first subscription. If the application is available and still valid, the new manager does not need to obtain a fresh one.

Subscribing to the ISA after the transfer

If the investor intends to subscribe to the ISA after the transfer the new ISA manager must obtain an ISA application form unless he already holds a valid transfer application form.

In that case the application form would be valid for subscriptions made in:

  • the year of transfer
  • each successive year following the year of transfer, in which the applicant subscribes to the ISA

Otherwise than for a Lifetime ISA, it would cease to be valid at the end of a tax year in which the investor fails to make a subscription, see applications to subscribe to an ISA.

There are some circumstances in which an ISA manager may accept an application signed by someone other than the investor. Detailed information on this can be found in the section ‘applying for an ISA on behalf of someone else’.

Reporting Subscriptions made in the year of transfer

Where current year subscriptions are transferred:

  • the old ISA manager must exclude the subscriptions from the annual return of information and enter ‘X’ in the type of ISA box
  • the new ISA manager must include the subscriptions in the annual return of information and enter ‘A’ or ‘B’ as appropriate in the type of ISA box

Reporting in respect of Lifetime ISAs will not be required as part of the annual information return (ISAComm100) which is currently reported to HMRC within 60 days from the end of the tax year.

A report of information will be required, pertaining only to Lifetime ISAs, in a digital format specified by HMRC and for Lifetime ISAs only. A technical specification has been published by HMRC to specify the format the report must follow. For 2017/18 only this will be required to be submitted on an annual basis, no later than 14 days following the end of the tax year (i.e. no later than 19 April 2018). The report will be both a claim and a return. Further information on the annual report for 2017/18 in regard to Lifetime ISAs may be found at reporting Lifetime ISAs.

In respect of Lifetime ISAs from 2018/19 the report will be required monthly and will cover the monthly periods from 6th of one month to the 5th of the next calendar month. More information on the content of this report will be provided at a later date.

Claims for payment of tax in respect of income paid after the transfer date

Claims for payment of tax in respect of income with a payment date on or after the date of transfer may not normally be made by the old manager.

However, provided that the old and new managers agree, the old manager may claim payment of tax in respect of income with a payment date on or after the date of transfer for a period of up to six months after the date of transfer.

The old manager should send the income received (and the tax claimed) to the investor if either:

  • his instructions were to pay any income away to the investor
  • the amount is less than the minimum the new manager is prepared to accept

Otherwise, the income (and tax reclaimed) should be forwarded to the new manager.

In the case of income received in respect of a Lifetime ISA, any such income that is not paid into a Lifetime ISA of the investor will be treated as having been withdrawn from the Lifetime ISA, and may be subject to a withdrawal charge, which should be deducted by the old manager prior to paying that income to the investor. If the old manager has not made, and does not intend to make, a claim in respect of income received by him either:

  • up to and including the date of transfer
  • from the date of transfer

the new manager can make the claim. The old manager should forward the relevant tax voucher(s), to the new manager to enable him to do so.

Cancellation of a transfer

Under the Financial Conduct Authority (FCA) rules, stipulated in the FCA’s sourcebook (conduct of business sourcebook), the transfer or an ISA to a new ISA contract may require the ISA manager to offer the investor the option of either cancellation rights or pre-contractual withdrawal rights (often referred to as cooling off). The time periods offered will be dictated by various factors including as follows:

  • the type of ISA being transferred into
  • whether the contract is a distance or non-distance (retail) contract
  • whether the ISA manager has chosen to offer withdrawal rights rather than cancellation rights
  • whether the ISA includes an insurance policy
  • whether the manager choses to voluntarily offer a longer cancellation period than that stipulated in the FCA sourcebook (there are further details on the treatment of tax liability provided the cancellation period does not exceed 30 days – except in the case of Lifetime ISAs cancelled in tax year 2017/18)

Cancellation periods offered are typically between 14 and 30 days and withdrawal periods post 6 April 2017 will be either 7 or 14 days.

If the new ISA manager offers a 7/14 day withdrawal period, the transfer request should not be forwarded to the old ISA manager until the withdrawal period has expired. The investor has 7/14 days to reconsider their decision (the withdrawal period). If, during the withdrawal period, the investor informs the new manager that they no longer wish to proceed with the transfer, the new manager should not progress the transfer any further. The transfer request will not be forwarded to the old manager, so the old manager may not know that a transfer was ever intended. The funds will stay in the original ISA.

If the new manager chooses not to offer a withdrawal period, there is a 14/30-day cancellation right. In this case the ISA would be transferred to the new manager before the 14/30-day cancellation period began. If the investor decides to cancel, it is the purchase of the investment in the new ISA that is cancelled, not the transfer itself. The investor has an ISA with the new ISA manager. The investor can choose to either:

  • invest the money in a different investment offered by the new ISA manager (in respect of Lifetime ISAs that the account remained within a Lifetime ISA wrapper)
  • close the ISA (in respect of Lifetime ISAs this will be treated as a withdrawal from a Lifetime ISA and will be subject to a withdrawal charge which must be deducted prior to closure)
  • transfer the ISA back to the old ISA manager (in respect of Lifetime ISAs it must remain within a Lifetime ISA wrapper or be subject to a withdrawal charge which must be deducted prior to transfer)
  • transfer the ISA to another ISA manager (in respect of Lifetime ISAs it must remain within a Lifetime ISA wrapper or be subject to a withdrawal charge which must be deducted prior to transfer).

Further information is available on closure of a Lifetime ISA.

Transfers in that cannot be accepted by the new ISA manager

Sometimes a transfer in cannot be accepted by the new ISA manager – typically because when the transfer history form and proceeds are received from the old manager:

  • the new manager realises that the amount of current year subscriptions being transferred exceed the annual subscription limit (or Lifetime ISA payment limit) when aggregated with the amount already subscribed with them in the current year
  • it arrives after the date by which all transfer proceeds must be received for a structured product (or similar) on sale only for a limited time
  • the new manager realises that the terms and conditions of the ISA product in question do not allow transfers in

In these circumstances the new manager should proceed as follows:

If the amount of current year subscriptions being transferred, when aggregated with the amount already subscribed to the new manager in the current year, exceed the annual subscription limit the new manager has a choice.

They may remove the excess current year subscriptions, and pay them to the investor and pay the balance into the ISA. Managers can ignore any growth on the amount removed and simply remove the excess subscription amount – however, this does not apply in respect of Lifetime ISAs. If the investor claims that the value of the excess subscription is less than the amount originally subscribed, the new manager will need to contact the old manager to determine the value. If this is less than the amount subscribed only the value needs to be removed.

They may return the current year subscriptions to the old manager, together with a note explaining why they are unable to accept them.

In all other circumstances, the new manager should return the cheque to the old manager, together with a note explaining why they are unable to accept it. Returning funds to the old manager could leave the transfer in ‘limbo’ as the old manager has followed the instructions to transfer out and a transfer out has happened under the ISA regulations (notwithstanding the new manager has not processed the transfer in).

Where the old manager is willing and able to do so, he should reinstate the ISA to put the investor back into the position he would have been in had the transfer out never happened. In this scenario Lifetime ISAs must be re-instated by the old manager.

If the old ISA cannot be reinstated (for example, where the old product is a fixed-rate product that cannot be re-opened once it has been closed) the old manager may offer the investor the opportunity to place the returned/rejected transfer proceeds into another of his ISA products. The old manager would need to treat this as an internal transfer between ISA products otherwise the sum would have to be regarded as an ISA subscription and subject to the annual subscription limits. In these circumstances where the old ISA is a Lifetime ISA and the rejected/returned proceeds are not placed in a Lifetime ISA, this will be treated as a withdrawal from a Lifetime ISA, and may be subject to a withdrawal charge, which should be deducted by the ISA manager.

If the old manager is not prepared to reinstate the ISA - and he is under no obligation to do so (with the exception of a Lifetime ISA) - he should allow the investor to transfer the ISA to another provider so the ISA status of the savings is not lost.

See worked examples of transfers that cannot be accepted by the new ISA manager (PDF, 183KB, 1 page) .

Cash withdrawn in error as a result of incorrect transfer advice by an ISA manager

Where cash is withdrawn from an ISA in error as a result of incorrect advice – from either the old ISA manager or the new ISA manager – in relation to a transfer application, HMRC may allow reinstatement where there is clear evidence of the investor’s intention to transfer the ISA and the incorrect advice given by the ISA manager.

Flexible ISA transfers

Where a Flexible ISA is transferred, the old manager must provide the new manager with:

Where the net current year subscriptions are £nil, and managers are unable to override the BACS default date of first subscription of 6 April, the transfer should proceed using the default date of 6 April.

The BACS system has a default date of first subscription of 6 April where current year subscriptions are £nil. Where managers systems are unable to override the default date, transfers made in 2017-18 should proceed using the 6 April default date. Managers must make the necessary systems changes for later years.

Where a manager receives a BACS transfer in 2017-18 showing a date of first subscription of 6 April and current year subscriptions of £nil, the manager should not capture or report the 6 April date of first subscription. For later years, the date should be captured and reported.

See a worked example of a flexible ISA transfer (PDF, 112KB, 1 page) .

Published 5 April 2018