Financial expert Martin Lewis has highlighted a crucial step for UK savers to preserve the tax-free status of their Individual Savings Accounts (ISAs) while accessing the most competitive interest rates. In a video on his Money Saving Expert website, Lewis explained that savers are not locked into their current ISA provider and can transfer their funds to another account for better returns.
Lewis stressed the importance of using a formal transfer process rather than withdrawing money and depositing it elsewhere. '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,' he said. Instead, savers should apply to a new provider and use its transfer forms, ensuring the money moves directly between accounts and remains within the 'ISA wrapper' to stay tax-free.
The current annual ISA allowance is £20,000 for the 2025/26 tax year, which begins in April. This cap is set to remain unchanged for 2026/27 but is expected to change the following year. From 6 April 2027, the Cash ISA limit for those under 65 will drop to £12,000 under a new two-tier system, with the remaining £8,000 of the total allowance directed to Stocks and Shares or Innovative Finance ISAs.
Lewis also advised savers with a shares ISA to check for potential exit fees before transferring, noting that while such fees are not common, it is wise to confirm in advance. The transfer process does not use up the current year's allowance, allowing savers to continue adding new money.
