Can I transfer a cash ISA to a stocks and shares ISA?

25 June 2013


I have a cash ISA from the 2007/08 tax year as well as a stocks and shares ISA from a different provider. I would like the stocks and shares ISA to remain where it is but, because of poor interest rates, I would like to transfer the cash ISA to a stocks and shares ISA with a new provider. However, I have opened and subscribed in full to another stocks and shares ISA this tax year (2013/14). It is my understanding you cannot have more than one stocks and shares ISA during any one tax year. What are my options?Find the best cash ISA or savings account for you


You can certainly transfer your cash ISA into a stocks and shares one at any time, however, the reverse is not allowed. So once you have made the change, you won’t be able to transfer the money back into a cash ISA.

The transfer will not affect the tax-free status of the original investment. It will still be counted as an ISA investment for 2007/08, so you still have your full ISA allowance during this current tax year.Technically speaking, the rule is that you can only subscribe to one stocks and shares ISA in a tax year.

You can use the same ISA provider that you currently have, and can even purchase the same underlying fund or share[s] that you have at the moment.

When an ISA is transferred, the old manager must provide the new manager with a written notice containing full information about the original investment and a declaration (known as a ‘transfer history form’).This means the new ISA manager can differentiate the tax years, and your valuation statements will probably show this.

Your question in turn begs another question: should you switch out of cash in the first place? Interest rates may be quite low at the moment, and the temptation to chase better returns is understandable.

However, such a move involves investment risk, and there is no guarantee that the higher returns will materialise.Your decision should therefore be taken in the wider context of your overall financial planning: it will depend on whether you can accept the risk, what return you need on the money, and how early you are likely to need access to the money.