Does transferring an ISA use my allowance?

No. Moving an ISA from one provider to another does not use any of your £20,000 annual allowance, provided the transfer is done through the official ISA transfer process rather than by taking the money out yourself. Transfers are not counted as new subscriptions, so the money you move sits outside the allowance entirely¹.

The distinction matters because the two routes look similar and behave very differently. Ask your new provider to arrange the transfer and your allowance is untouched, whether you are moving a small sum or £40,000³. Withdraw the cash yourself, close the old ISA and pay it into a new one, and that payment counts as a fresh subscription against the current year's £20,000, while the money loses its tax-free status in the gap⁴.

The £20,000 annual allowance is set by the government and was confirmed at that level in the December 2025 policy statement⁶. It resets every 6 April, and anything unused is lost rather than carried forward⁷.

Transferring an ISA does not use your allowance

The rule is the same across cash ISAs, stocks and shares ISAs and innovative finance ISAs: a transfer moves existing savings or investments between providers while keeping their tax-free wrapper, and it does not touch the £20,000 you can pay in during the year⁹. Providers describe it in almost identical terms, which reflects the underlying rules rather than marketing: transfers do not interfere with your annual allowance and are not treated as new subscriptions¹.

That holds whether you move the whole balance or only part of it, and whether you move to the same type of ISA or a different one. You can transfer a cash ISA into a stocks and shares ISA, or the other way round, without affecting the allowance⁹. Moving shares directly from one stocks and shares ISA to another also uses none of your allowance, which leaves the full £20,000 available for new money¹⁰.

The practical consequence is that transferring is not a substitute for paying in, and paying in is not a substitute for transferring. Someone with £40,000 already inside an ISA can move the whole sum to a new provider and still pay in up to £20,000 of new money in the same tax year³. Someone who instead withdraws that £40,000 and reinvests it would use £40,000 of allowance, which is more than the annual limit allows.

ISA allowance: £20,000 a year, reset every 6 April

The annual ISA allowance is £20,000 per tax year, a figure the government confirmed would be kept at that level in its December 2025 policy statement⁶. The tax year runs from 6 April one year to midnight on 5 April the following year, and the allowance resets on 6 April⁷.

Two features of the allowance catch people out. The first is that it does not roll over. If you have not used all of it by the end of the tax year, it cannot be carried into the next one⁷. The second is that withdrawing money does not restore it. All payments into an ISA use up part of the £20,000, and taking money out later does not give that allowance back¹³.

The allowance is also a total across all your ISAs, not a per-account figure. You can hold cash ISAs with several providers as long as the total you pay in each year stays within the £20,000 limit¹. That is why the transfer route matters so much: it lets you consolidate or move money around without eating into the one pot of new allowance you get each year.

Withdrawing the money yourself can cost you allowance and tax-free status

The official transfer process exists precisely because the do-it-yourself version goes wrong. If you withdraw money from an ISA, it loses its tax-free status, and if you pay it back into another ISA, that payment counts towards your annual allowance for the current tax year¹⁴. The withdrawn money also stops being sheltered from tax while it sits outside an ISA⁵.

The loss can be permanent in a way people do not expect. Money taken out of an ISA during the year still counts towards your limit, and you lose the tax advantages on it¹⁵. Money taken out of an ISA loses its tax-free status¹⁶. In other words, the withdrawal does not free up allowance for a fresh payment, it simply removes the protection.

The route that preserves both is to ask the new provider to run the transfer. Providers state that money should not be withdrawn by the saver, because doing so can affect the ISA's tax-free status and use up your allowance¹⁷. The new provider requests the money from the old one, the tax wrapper travels with it, and no allowance is consumed⁴.

Transfers from previous tax years and the current tax year

Transfers fall into two groups, and the rules differ slightly between them.

Money saved in previous tax years can be moved in full or in part, and it does not count towards the current year's allowance⁹. This is the simplest case: the money was paid in during an earlier tax year, so it has already done its work against an earlier allowance, and moving it now changes nothing¹⁸.

Money paid in during the current tax year is different in one respect. Since 6 April 2024, providers have been allowed to offer partial transfers of subscriptions made in the current tax year, so you are not forced to move all of this year's money at once⁸. Not every provider offers this, so it is worth checking before you start. Transfers from previous tax years can already be made in full or in part⁹.

A transfer is not the same as opening a new ISA. You are moving existing savings while keeping the tax benefits, and contributions made in the current tax year still count towards the annual allowance⁴. If you paid £1,000 into a cash ISA and then transferred it to a stocks and shares ISA in the same tax year, you would still have used only £1,000 of that year's allowance¹⁹.

Where a transfer does count: Lifetime ISAs and moving money from a general investment account

The "transfers do not use allowance" rule has two important exceptions.

The first is the Lifetime ISA. Transferring money into a Lifetime ISA counts towards your £4,000 Lifetime ISA limit, though not your overall ISA allowance². The government's technical note is explicit that the value transferred counts against the £4,000 Lifetime ISA limit but not the overall ISA limit²⁰. Moving money the other way is worse: a transfer from a Lifetime ISA to another type of ISA counts as a chargeable withdrawal, which can trigger the withdrawal charge²⁰.

The second exception is money coming from outside the ISA system. Moving cash or investments from a general investment account into an ISA counts towards your £20,000 annual allowance²². The same applies to shares bought through a Save As You Earn scheme: transferring them into an ISA counts towards your annual allowance²³. These are not ISA-to-ISA transfers, so the protection does not apply.

Cash, stocks and shares and innovative finance ISA transfers

The transfer rule is the same whichever type of ISA you hold, but the mechanics differ.

Cash ISA transfers are the most straightforward. You can move savings between different types of ISA and different providers, and transfers do not affect your annual allowance⁹. Fixed rate cash ISAs are the exception to watch: they often carry early access charges, and the 30-day limit on transferring into a fixed cash ISA was removed for accounts opened from 2 June 2025, while older accounts keep the old limit. Check the terms before moving money out of a fixed rate account.

Stocks and shares ISA transfers can move either cash or investments. You can transfer existing cash ISAs and stocks and shares ISAs into a new stocks and shares ISA without affecting your allowance²⁴. Where investments move across, the receiving provider needs to be able to hold them, and some providers will only accept certain investments.

Innovative finance ISA transfers carry an extra warning. Because the underlying loans are not easily sold, moving money out can take longer, and the same rule applies as everywhere else: do not withdraw your money out of your other ISAs to transfer, as it could impact on your current ISA allowance²³. Use the official transfer process instead.

How to transfer without touching your allowance

The process is designed to keep the tax wrapper intact, and it depends on the new provider doing the work.

1. Choose the provider you want to move to and open the new ISA.
2. Ask the new provider to transfer the old ISA across. Do not close the old ISA first²⁵.
3. Complete the transfer form, giving details of the old account and whether you want a full or partial transfer.
4. The new provider contacts the old one and arranges the move directly.
5. The money or investments arrive in the new ISA with the tax wrapper intact and no allowance used¹.

The key step is the second one. Providers state that the new provider must arrange the transfer directly, and that the old ISA should not be closed first²⁵. Closing it yourself turns a transfer into a withdrawal, which is where the allowance and tax problems start.

If something goes wrong, the How to transfer an ISA page covers the process in more detail, and Compensation if my ISA transfer is delayed explains what to do if a transfer takes too long. For the wider picture on what the allowance covers, see The ISA allowance, and for the separate question of whether unused allowance can be saved up, see Does unused ISA allowance roll over?.