Britain’s ISA system has undergone major changes over the years including the introduction of a new ISA – the Innovative Finance ISA (IFISA) – and some relaxing of the rules around moving money between different kinds of ISA.
For consumers, this provides greater scope to improve the returns they receive even on ISAs they’ve been holding for several years. Now there is a much wider range of ISA options available. As well as Cash ISAs and Stocks & Shares ISAs, investors can put money into Lifetime ISAs and IFISAs – which allow investment into secured business loans via a Peer to Peer (P2P) lending platform.
But while there is a £20,000-a-year limit on new money saved into an ISA, the system’s transfer rules mean that investors can move old ISA money into any other form of ISA with no annual restrictions. This is crucial in allowing consumers to seek out the most generous rates of return on their money.
The main restriction on transfers concerns your destination ISA, and whether the provider allows transfers in. At FOLK2FOLK we regularly accept transfers from other ISA providers.
People who have managed to diligently put money into ISAs since the system was introduced in 1999, may have amassed ISA funds worth tens if not hundreds of thousands of pounds, depending on the yields or growth rates they have managed to achieve.
But in our current rising rate environment, it makes sense to shop around for the most profitable home for your capital, and this is where an IFISA can provide an attractive solution. FOLK2FOLK’s IFISA for example, enables Investors to earn an interest rate from 7.5% p.a. tax-free.
To ensure a successful ISA transfer, speak to the company you want to transfer to first so they can assist with the administration of the transfer. If you simply withdraw cash from an existing ISA rather than formally transferring it, the money will lose its ISA wrapper status and be subject to the £20,000 annual limit when you try to reinvest.
Perhaps now is the time to consider transferring your ISA to a better deal? For more information about FOLK2FOLK’s Innovative Finance ISA (IFISA) please visit our IFISA page, or if you’d like to speak to us to discuss ISA transfers please contact us.