The Money Saving Expert has shared how ISA holders can switch providers to get better interest rates without losing tax-free benefits
A financial expert has shared a “really important” measure you can take to preserve the tax-free status of your ISA. This step could also help you get the most competitive rates available.
An Individual Savings Account (ISA) allows people to save money and earn interest without paying tax. However, the interest rate you receive is dependent on the deal you secure at the time from your bank or building society.
You may think this means you’re locked into the account you currently hold. But Martin Lewis has explained that this isn’t the case. In a video uploaded to his Money Saving Expert (MSE) website, Martin revealed that you can transfer your ISA.
He said: “If you’ve got money in an ISA, don’t think it’s a done deal and you can’t do anything with it. You have a right to transfer ISAs, you can move it to another payer to get a better deal, whether it’s improving the interest on your cash ISA, or getting a better selection of stocks and shares into your shares ISA.”
There is an annual cap on how much you can hold in an ISA. Currently, this cap stands at £20,000 for the year 2025/26, with the new financial year beginning in April. This cap is set to remain unchanged for 2026/27 but is anticipated to change the following year.
Martin continued: “And when you do do a transfer, it doesn’t use up this year’s allowance, it doesn’t stop you putting new money in.” He outlined a particular approach to ensure your interest remains tax-free. “But it’s really important that to do a transfer you don’t take your money out of your existing ISA and then put it in a new one.
“You go apply to a new provider and on its forms, it’ll have a bit about transfers that you fill in. Then, the new provider takes the money from the old ISA for you and puts it into its ISA.
“That way you keep it inside the ‘ISA wrapper’. It stays protected, it stays tax-free. You’ve now just got your cash or shares ISA in the place you really want it to be.”
However, in an accompanying note, he emphasised the need to check for potential exit fees if you possess a shares ISA before moving your money. Whilst “not common”, it’s wise to confirm this in advance.
For additional information on ISAs, visit the MSE website here.
Changes coming in 2027
From 6 April 2027, the annual Cash ISA limit for those under 65 will fall to £12,000 as part of a fresh two-tier system designed to encourage investment.
Although the total ISA allowance is anticipated to remain at £20,000, the outstanding £8,000 will need to be directed towards Stocks and Shares or Innovative Finance ISAs.
