How hard is it to transfer your ISA across providers? And can you only pay into one of each type of ISA per year?
20 July 2021
Question by Philip
Hello, I currently have a Stocks & Shares ISA and a Junior ISA with Wealthsimple. I am considering changing these to Vanguard, but I am unsure if transferring across providers is a simple process, and if they can transfer without issues. Also I am confused, as I would maybe like to invest over a few different platforms, but it seems you can only pay into one per year?
Answered by Boring Money
A good question and one that often pops up!
Generally the transfer process is fairly straight forward, especially when transferring between two online providers. You can transfer a Stocks & Shares ISA and a Junior ISA (JISA) without losing any of the tax benefits and the transfer of an existing ISA / JISA does not count towards your annual allowance.
Your annual ISA allowance
As you may be aware, the overall ISA allowance for 2019/20 is £20,000, which covers contributions to Cash ISAs, Stocks & Shares ISAs, Innovative Finance ISAs and Lifetime ISAs (LISA).
You are able to split your ISA allowance across the different ISA types, however you are correct that you would only be able to contribute to one of each type of ISA per tax year (i.e. you could split your allowance between one Cash ISA and one Stocks & Shares ISA, but not between two Stocks & Shares ISAs).
The 2019/20 JISA allowance is £4,368, and can be split between a Junior Cash ISA or Junior Stocks & Shares ISA.
However, for Junior ISAs you are only able to hold one of each type of ISA across all tax years.
As you have mentioned Vanguard I have attached a link to their transfer process here.
There are a few things you should be aware of:
The value of your ISA opened during the current tax year must be transferred in full. You will also be able to elect to transfer any ISA holdings from previous tax years (if applicable).
Junior ISAs must always be transferred in full (whenever opened) as a child can only have one Junior Stocks & Shares ISA at any one time.
Assuming you were to complete your transfer from Wealthsimple to Vanguard, if you hold Vanguard funds within your existing ISA/JISA, you can generally transfer these funds without the need to sell them (this is sometimes called re-registration). If your existing funds are not available via Vanguard, the holdings would have to be sold and transferred as cash within the ISA. This would lead to you being temporarily out of the market.
The time frames to complete an ISA transfer will be dependent upon your existing provider. If it takes longer than 30 working days, you can complain to the Financial Ombudsman Service.
As with any transfer, you should consider any transfer costs or penalties from your existing provider as well as any initial or set up charges on the new ISA. You should also consider the difference in ongoing charges between both providers, to include any ISA ‘product’ charge and fund management charges. The value of your investments can fluctuate and there is no guarantee the new ISA/JISA will provide a better return than your existing provider.
I hope this helps.