Transferring previous years’ ISA savings into an ISA account with higher returns could significantly boost any tax-efficient returns you receive. Transferring is easy, but you must make sure that you transfer properly.
If you encash your previous years’ ISA allowances they will lose their tax exempt status and you will undo your previous good work. All you need to do is request a transfer form for the new account, fill it in, and your new ISA provider should do the rest for you.
You may wish to consolidate any existing ISAs into one new ISA account to maximise any increased returns, but there are a couple of things you need to take into account, including whether the combined amount takes you over the £85,000 Financial Services Compensation Scheme (FSCS) savings limit for one financial institution or not.
Another thing to bear in mind is that you can transfer your existing cash ISAs into stocks & shares ISAs, but not the other way round.
The earlier you invest your ISA allowance in a tax year, the more time for your investment to generate returns, protected from tax.
If you are not happy with the returns you are making on your existing ISA investments, you can transfer them into something new without losing the protective tax wrapper.
There is a wide range of options to choose from for investing and saving using your ISA allowance. As well as cash ISAs, investment or stocks and shares ISAs include investment funds specialising in sectors, investing globally or in corporate bonds, as well as structured investment plans which offer potential defined returns linked to the performance of a market, such as the FTSE 100 Index, over fixed terms.