Minimise your Isa transfer fees

Customers who had opted to leave before the switch over were being quoted waits of up to three months. And when your Isa is mid transfer you are unable to trade in it, or even see the account, meaning many Barclays customers have been locked out of the market for several months due to delays. Other brokers said the bank was taking three times as long as usual to reply to their requests, putting them behind schedule in terms of moving customers' accounts.

In response, Barclays lifted its normal block on trading during Isa transfers to allow customers experiencing delays to access their investments. It has also moved from a manual transfer process to an electronic process, which it said should speed up exit times. And customers do not have to pay to leave Smart Investor, unlike when you transfer out of many other brokers.

These problems at Barclays have highlighted more widely the issues customers encounter when they try to move to another individual savings account (Isa) provider. Moving to a new DIY investment platform can be expensive, both in terms of the fees you pay and the investment gains you could lose by being unable to deal. And it can be time intensive. But there are ways to keep down the costs and speed up the process.

You can move any kind of Isa to a new provider, including moving money from a stocks and shares Isa into a cash Isa and vice versa. And transfers do not count towards your annual Isa allowance, which for the current tax year is £20,000.

But there are restrictions relating to Junior Isas (Jisas) and Innovative Finance Isas. You cannot transfer a Jisa into an adult stocks and shares Isa. You can only move one Jisa into another Jisa and the registered contact for the account will have to sign the forms. But if the Jisa is in the name of someone aged between 16 and 18 they are responsible for signing the transfer.

You also might not be able to transfer all the investments within an Innovative Finance Isa if they are not supported by your new platform, but you can transfer any cash you hold within it. And if you transfer assets from a Lifetime Isa (Lisa) into another kind of Isa you will pay a penalty of 25 per cent of the value of the Isa.

There are also restrictions on the way you move money from your current tax year Isa. You can move any money from your old Isa years without moving the whole sum. But if you have already started funding an Isa in the 2017-18 tax year you will have to move across the entirety of the amount you've saved in the current tax year.

You can move your investments either by cashing them in and moving the money over, or hold onto them and move them in-specie, meaning you remain in the market. With both options, you will be unable to trade during the transfer. Never undertake Isa transfer yourself - always ask your new provider to do it for you. Even if you want to cash in your investments and move them across, you must not sell the holdings and move them yourself because it will count towards your Isa allowance for the current tax year.

Also check that your intended new provider accepts transfers in, as there are a few companies that don't do this.

For a comparison of the charges from all major brokers on the market, use our Broker Comparison tool. 

How long will it take?

Cash is the quickest thing to transfer, followed by shares, investment trusts and exchange traded funds (ETFs), and then open-ended funds. HM Revenue & Customs advises that Isa transfers should take 15 working days for a cash Isa, and 30 working days for a stocks and shares or innovative finance Isa. But timescales can vary widely.

Stocks and shares are slower to move over because there more parties involved in the process and funds take the longest because there are even more parties to communicate with to facilitate the transfer. Jason Hollands, managing director at Tilney Group, says: "Moving cash can take a matter of days and is very straightforward. Shares take longer, although if you hold UK-listed shares or investment trusts, the process can be completed within two to four weeks. Funds take the longest because it involves the fund management groups, third-party administrators, custodians and investment platforms. The time it takes can vary depending on who is in that chain. Some platforms are reasonably on the ball and will respond quickly, but others can take longer."

The majority of brokers use an industry-wide system for electronic in-specie transfers, which Barclays has just moved over to. One of the reasons why many Barclays customers are having to endure long transfer times is because they are still being processed through the old manual system.

"A couple of years ago you used to hear real horror stories with transfer times taking up to three months and backlogs building up between different administrators, but that should not happen anymore," says Mr Hollands. "However, it really does vary based on how efficient each of the participants involved is."

When to move as stock and when to move as cash

Moving your holdings in-specie means you can remain invested in the market and do not have to repurchase your holdings when you move to a new provider. Unlike when you move into cash, you will not lose out if the market rises while you are mid-transfer.

It also makes sense to remain invested and move your stocks in-specie if you are about to receive dividends from any of your holdings which you would forego if you moved into cash.

However, there are also good reasons to move your holdings as cash. Moving stocks as cash is far quicker and less expensive than moving in-specie. Many brokers charge per line of stock and can levy fees as high as £25 per stock to move it across. There is also the risk that the market could fall while you are out of it and, although your portfolio will be invested, you will be unable to trade during this time and could lose money as a result.

You can keep cashed in stocks and shares holdings in your stocks and shares Isa when you move them across, and because they remain within an Isa wrapper throughout the transfer there is no capital gains tax (CGT) to pay.

Mr Hollands says: "If you are really worried about an imminent market fall, you should transfer in cash."

It can also be beneficial to move your holdings as cash if the platform you are moving to offers a very different range of investments to those you currently hold.

"Not all platforms will be able to hold all lines of stock," explains Mr Hollands. "Or it might be that some platforms offer certain funds not available elsewhere or share classes that are much cheaper than those you held elsewhere." 

That means that you might either need to change some of your holdings or might want to make the most of new options when you move platform. If you do this you will need to sell your existing holdings.

"Moving platform can also be a good time to start a new portfolio," adds Mr Hollands.

You don't have to move all of your portfolio as cash or as stocks and shares – you could opt for a mixture. This could be a cost-effective way to review your portfolio, keep any holdings you are expecting dividends from or are sure you want to keep, and rationalise any holdings that you have less conviction in but would add to your transfer bill if moved to your new platform.

The cheapest platforms to move in and out of

An investor wanting to move a portfolio of 10 funds and five shares could pay as much as £375 just to move that portfolio from platforms such as AJ Bell Youinvest, Hargeaves Lansdown and Bestinvest which are among the most expensive to move out of. They charge £25 per holding to move in-specie.

Most platforms do not charge to move holdings as cash. Those that do include the Share Centre, which charges a £25 one-off fee to transfer investments, regardless of how many you move, and Alliance Trust Savings which levies a £100 flat fee.

Interactive Investor does not charge customers who have been with the platform for less than a year for the first 10 holdings they want to move. After that it charges £15 per holding. After one year customers pay £15 for each holding transferred out.

Fidelity Personal Investing, Vanguard and IG do not charge for any kind of transfer out.

Some platforms charge an exit fee on top of transfer out fees meaning you could have more to pay after moving your holdings. For example, Bestinvest charges an account closure fee of £50 + VAT and Hargreaves Lansdown charges £25 + VAT.

Some providers will pay your moving costs when you transfer to them. Bestinvest and AJ Bell cover up to £500 of the exit fees levied by a new customer's former Isa provider. IG, meanwhile, rewards new customers by paying up to £250 of the cost of transferring holdings from another provider, based on the value of assets transferred. IG pays £75 towards your costs if you transfer assets worth between £10,000 and £49,000, £125 for assets between £50,000 and £99,000, and £250 for assets worth over £1m. 

Even if it doesn't state it covers transfer costs, it is worth asking your new broker if it would consider covering some of your exit costs.

Platform exit fees for an Isa 

Source: Providers

Exit fees for a portfolio of 10 funds and five shares* 

*Account closure fee not included.

Source: Providers