You’ve finally had it. Your existing stocks and shares ISA provider has dropped a fee bomb and you’re outta there! But perhaps you haven’t experienced the stocks and shares ISA transfer process before? Life is busy after all. And those filthy bloodsuckers probably won’t let you go easily.
So – in the age of enshittification [1] – just how hard is it to transfer your stocks and shares ISA?
Here’s our quick guide to dumping your ISA provider.
[2]
Dear ISA provider… it’s not me, it’s you
You normally have three options for extracting your ISA from the clammy hands of the unworthy:
1. Cash transfer
Your current platform sells your assets and transfers the cash directly to your new ISA provider. You choose new investments from scratch, making this option good for a brand new start, if things have got a little, ah, messy.
- Your ISA’s anti-tax armour remains unbreached.
- It should take two to three weeks to transfer, but it can take longer.
- You are out of the markets [3] as soon as your assets are sold and until you repurchase a fresh batch. That could go for or against you. No one knows.
2. Stock transfer
The existing contents of your stocks and shares ISA [4] are transferred intact to your new provider. In other words, all your funds and shares are handed over without being sold or repurchased. This type of ISA transfer is often referred to as an in specie transfer, or as re-registration.
- Again, your ISA’s tax status is not compromised.
- It should take about four to eight weeks but you know how it goes.
- You remain in Mr Market at all times and are subject to his whims.
- You won’t be able to trade until the transfer is complete.
3. DIY sell-off
Of course, you can always flog your assets yourself and use the proceeds to open up a new account with another ISA provider.
- Your ISA’s tax powers are very much kyboshed in this scenario. 1 [5]
- Transfer out fees are avoided, though perhaps not account closure charges. Also note some platforms will pay your transfer fees to secure your business.
- You’ll pay dealing fees to sell and buy anew.
- You’ll be out of the market for a few days.
Stock transfer: The nitty-gritty
Personally, I would use a stock transfer all day long. The annual advance of a market can occur in just a few days and I’d hate myself if I missed out.
However, there are a couple of potential snag-ettes to watch out for with the ol’ in specie manoeuvre:
- Contact your new provider and old provider to make sure they both play ball when it comes to in specie transfers.
- Check that assets in your old ISA are available in your new one. If not, then talk to your new provider. Otherwise, incompatible assets are likely to be sold.
- Different provider’s forms use different terminology to describe an in specie transfer. Check if you’re not sure which box to tick, and, whatever you do, avoid the box marked ‘liquidate’.
- Some providers impose a transfer out charge per fund or line of stock – just one last pound of flesh before you leave. Some new providers will pay these fees for you. (Occasionally, they might be waived. It never hurts to ask!)
To do list
If your old provider’s ‘just one last chance’ pleas have fallen on deaf ears and you’ve identified your new dream partner then completing your stocks and shares ISA transfer isn’t much more daunting than filling in a form:
- Complete the ISA transfer forms provided by your new platform.
- Ask your new provider if it will cover your transfer out fees.
- Tell your old provider to close your account once the transfer is complete.
- Cancel your old direct debit and relax.
That’s about all you need to know. I’ve got a couple of bullet points left in the tips-gun though so let’s fire ’em off:
- Your new platform should tell you when your account has transferred.
- You can transfer your current year’s ISA, although new money can only be added when the transfer is complete.
- Transfers do not count towards your current year’s ISA allowance [6].
- You can even partially transfer an ISA. List the assets you’d like to transfer, though note that your old provider can refuse a partial transfer.
- Document all your holdings (names, ISIN codes, quantities held) before you transfer. Take a screenshot of your holdings sitting in your old broker. This will come in very handy should any holdings go astray during the transfer.
That’s it. We’re done. Happy transferring.
Take it steady,
The Accumulator
- In other more boring words, the money you had tucked away in the ISA loses its tax protection.[↩ [11]]