Martin Lewis explained a way to transfer ISAs while keeping your interest tax-free (Image: Getty)
A finance expert has shared a “really important” move you can make to continue to keep your ISA tax-free. Doing this will also ensure you get the best rates going.
An Individual Savings Account (ISA) allows people to save money and earn tax-free interest. However, the rate you get on your interest will depend on the deal you are able to get at the time from the bank or building society.
You might think this means you are tied to the account you have. However, Martin Lewis explained that this is not the case. In a video uploaded to his Money Saving Expert (MSE) website, Martin revealed that you can transfer your ISA.
He said: “If you’ve got money in an ISA, don’t think it’s a done deal and you can’t do anything with it.
“You have a right to transfer ISAs, you can move it to another payer to get a better deal, whether it’s improving the interest on your cash ISA, or getting a better selection of stocks and shares into your shares ISA.”
An Individual Savings Account (ISA) allows people to save money and earn tax-free interest (Image: Getty)
There is a yearly limit on how much you can have in an ISA. Currently, this limit is £20,000 for the year 2025/26 with the new financial year starting in April. This limit is set to stay the same for 202/26 but is due to change the following year.
Martin continued: “And when you do do a transfer, it doesn’t use up this year’s allowance, it doesn’t stop you putting new money in.” He detailed a specific way to do this to ensure your interest remains tax-free.
“But it’s really important that to do a transfer you don’t take your money out of your existing ISA and then put it in a new one.
“You go apply to a new provider and on its forms, it’ll have a bit about transfers that you fill in. Then, the new provider takes the money from the old ISA for you and puts it into its ISA.
“That way you keep it inside the ‘ISA wrapper’. It stays protected, it stays tax-free. You’ve now just got your cash or shares ISA in the place you really want it to be.”
Read more: Bank ‘penalty’ warning as savers face ‘£430 loss’
Read more: Building society launches competitive 4.1% ISAs ahead of key deadline
However, in a caption, he urged people to check for potential exit fees if you have a shares ISA before moving your money. There are “not common” but it’s worth checking first.
For more information on ISAs, visit the MSE website here.
Changes for 2027
From April 6, 2027, the annual Cash ISA limit for people under 65 will be reduced to £12,000 as part of a new two-tier system designed to encourage investing.
Although the total ISA allowance is set to remain at £20,000, the remaining £8,000 must be placed in Stocks and Shares or Innovative Finance ISAs.