What happens if after you’ve had your ISA for a period of time you notice the underlying investments are not performing?
You’re happy with the tax breaks you’ve received but decide the investment is no longer meeting your needs. Or maybe you simply wish to switch to a provider with a wider choice of funds because your circumstances have changed.
How can you shift your investment without losing the tax benefits?
You are able to transfer the value of your ISA proceeds to a different manager at any time. This is particular easy if you have a self-select ISA, where you can change investment managers without switching ISA providers.
If you wish to switch ISA providers once you have made your choice of new provider,complete your new manager’s ‘Transfer request form’ and it will take charge of requesting the proceeds of your existing plan. However, investors must enact an official transfer.
Do not close one ISA and open another.
Closing one ISA and reinvesting the proceeds in another is deemed to be a withdrawal and, once you withdraw, you lose all tax benefits on the money taken out. You cannot reinvest and get the tax benefits back unless the amount you have falls within the current tax year’s unused allowance.
Whilst transferring is relatively straightforward, you should bear in mind that an investment, particularly in shares, is a long-term decision and your investment is likely to fluctuate. Therefore, make sure your investment is really not right for you, rather than switching just because of a short-term downturn in markets. There are charges involved in any transfer, so these need to be weighed up against the potential gains before shifting your portfolio. Moving can add costs and it therefore best not to be overly swayed by short term fluctuations in markets.
If you are unsure whether your current ISA represents the right investment for you please do give me a call on 01932 698150. If we both feels it’s appropriate we can then arrange an initial meeting without cost or obligation on your part, to discuss your priorities in more detail.