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.