Do ISA transfers count towards your annual allowance?

Hi David,

ISA transfers do not count towards your annual ISA allowance, as long as you use the official transfer process through your new ISA provider.

In summary

ISA transfers do not use your annual allowance if done through the official process.

Always use the new ISA provider’s official transfer process to move your funds.

You can still contribute new money up to your £20,000 annual ISA allowance after transferring.

You can transfer any amount, including specific contributions, without affecting your current year’s allowance.

Bear in mind

Withdrawing and redepositing yourself counts as a new contribution and can breach your allowance.

So in your case, with over £20k sitting in your existing ISA earning less than 2%, you can move all of that money into a better-paying ISA without it affecting this year’s £20,000 allowance. You can transfer the lot and still contribute in fresh money this tax year if you want to.

However, you'll need to initiate a proper transfer process through your new ISA provider. They’ll handle the whole thing for you - including alerting Lloyds and making sure the money keeps its ISA status as it moves. You should be able to find information about ISA transfers and how to start on your new provider's website.

Crucially, don’t try to withdraw the funds yourself and then manually deposit them into a new ISA. HMRC will see that as a new contribution, and if you stick in more than your remaining allowance for the year, you could accidentally over-contribute and face penalties.

Hope that clears things up!