Transfer your ISA

We are all well accustomed to seeing stories of doom and gloom about the economy and interest rates at the lowest ebb, so now more than ever it is important to regularly review your savings to make sure your money is working hard enough.

As many will already know, you can save up to £7,200 in an ISA with up to £3,600 in cash. If you are over 50 then you can invest up to £5,100 into a cash ISA and £10,200 in total. These savings pots are a fantastic way to maximise your investment potential as they are tax free.

However, many Contractors are unaware that you can transfer existing ISAs into this years ISA without incurring any tax penalties. Many of us have several ISA pots that we have invested in over the years and whilst this is perfectly fine, you may find it beneficial to transfer them into one, easy to manage account. Not only will it be much easier to keep track of your money but this is the perfect opportunity to breathe new life into underperforning fund choices.

Why transfer?

The need for you to transfer will depend on your individual circumstances such as how much you have saved in ISAs over the years, if you started saving when ISAs were first introduced in 1999 then you could have as much as £40,000 in ISAs now. With PEP investments on top of this figure you could be looking at a very substantial sum.

Even cash ISAs need to be kept a watchful eye upon as , whilst interest rates are generally quite low at the moment due to the low base rate, it is still worth shopping around to find a better rate. Just 0.2% extra interest on an ISA holding £20,000 would give you an extra £40 in interest each year so a small change can make a big difference to your potential return.

How do you transfer an ISA?

Transferring an ISA is simple but you must excercise caution. It would be disastrous if you were to close an existing ISA account and then try to move the money as you would lose the tax breaks available. This is because you are only able to contribute a maximum sum into an ISA each year and withdrawing your money to pay into a new ISA would count towards this limit.

Instead, you should complete a ISA transfer form to provide the details of your old ISA so that the new provider can sort out the transfer for you. It is worth bearing in mind that ISA transfers are accepted by only 84% of ISA providers so you must check beforehand that the ISA you want to move to will accept the transfer.

Consulting before making a decision to transfer may prove beneficial, not only will they help you to find the right ISA to suit your needs but also to help search for providers that accept transfers, saving you time and money.

At ContractorFinancials, we search the whole of the market to find the right ISA to suit your needs and we can help you to complete your ISA transfer quickly and with the minimum of fuss.

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