Thinking about moving your savings from a Cash ISA into a Stocks & Shares ISA? You’re not alone. Many savers eventually decide they want their money to work harder in the markets rather than sit in cash, where it often struggles to beat inflation.
The good news? You can switch without losing your tax benefits or facing a penalty, as long as you do it the right way.
The Quick Answer
To avoid penalties or losing tax benefits, do not withdraw the money yourself. Instead, open a Stocks & Shares ISA with a trusted provider and ask them to perform an ISA transfer. By using the official transfer process, your money keeps its ISA “wrapper” (the tax-free status), and the transfer does not use up your annual ISA allowance.
Why Switch from a Cash ISA to a Stocks & Shares ISA?
Having advised clients for more than 15 years, one big question we hear all the time is: Should I move my Cash ISA into a Stocks & Shares ISA?
Let’s break it down in simple terms:
Better chance to grow your money
With a Cash ISA, your money just earns interest. But interest is often very small and can lose value against rising prices. A Stocks & Shares ISA lets your money grow by investing in the market. Yes, there are ups and downs, but over time, it usually does better than cash.
You still keep the tax-free perk
When you transfer your Cash ISA the right way, you don’t lose your tax benefits. Your savings stay tax-free, and so do any profits, dividends, or growth inside your Stocks & Shares ISA.
More ways to invest
Cash ISAs only give you interest. Stocks & Shares ISAs open the door to more choices—like funds, ETFs, bonds, or even individual company shares. This means you can build a plan that fits you, not just the bank’s interest rate.
So if you’re ready to move, here’s how to make the transfer smooth, safe, and penalty-free.
The Golden Rule: Don’t Withdraw the Money Yourself
This is the most important thing to remember. If you take money out of your Cash ISA and try to put it into a Stocks & Shares ISA yourself, you could:
- Lose your ISA wrapper (the tax-free protection)
- Accidentally use up your annual ISA allowance.
Instead, let your new provider handle it for you. This is the official way to move money without penalty.
Step-by-Step: How to Transfer without Hassle
1.Tell us about your ISA
Share a few details about your current ISA provider. Make sure your name and address match with both providers, or the transfer could be delayed.
2.Open a Stocks & Shares ISA
You can usually do this online in minutes. No need to deposit money right away.
3.Request an ISA transfer
Once your new account is open, fill in a short transfer form. Select Cash ISA → Stocks & Shares ISA.
4.Pick full or partial transfer
- Full transfer: Move everything.
- Partial transfer: Move only some of the balance.
(partial transfer is now allowed, even for money paid in during the current tax year, check your provider’s rules.)
5.Invest your money
When the funds arrive, you can choose shares, funds, or ETFs. Some people invest all at once, others make small contributions gradually.
ISA Transfer Common Mistakes
When moving your savings, a few simple ISA mistakes can cost you money. Here’s what to watch out for:
- Fixed-term ISAs
If your Cash ISA has a fixed rate, moving it too early might mean losing some interest. Always read the fine print before transferring.
- Exit fees
Some ISA providers charge you to move your money out. Not all do—but it’s smart to check first so you don’t get surprised by extra fees.
- Worrying about market timing
Transfers take a little while, and your money may sit in cash briefly. Plan ahead if you don’t want a gap in your investments. You won’t lose money if the market dips during this time, but you also won’t gain either if it rises.
FAQs
Will transferring affect my ISA allowance?
No. Transferring your ISA with Sentinel doesn’t reduce your £20,000 annual allowance. Your full allowance is still available for any new contributions you make this tax year.
Can I transfer just part of my Cash ISA?
Yes. Partial transfers are allowed, even for money you’ve added this tax year. This means you can move some of your savings into a Stocks & Shares ISA with Sentinel while keeping the rest in cash. Our team can guide you through any provider-specific rules or forms.
How long does it take?
Moving a Cash ISA to another Stocks & Shares ISA transfers can take up to 30 calendar days.
Will I lose investment growth during the transfer?
While your money is moving between providers, it will sit in cash temporarily. This means you won’t lose money if the market falls, but you could miss potential gains if the market rises. Our team helps you plan so the transfer is as smooth as possible.
The Bottom Line
Switching from a Cash ISA to a Stocks & Shares ISA doesn’t need to be complicated. By using the official transfer process, you’ll keep your tax-free benefits, avoid penalties, and give your savings the chance to grow in the market.
If you’re serious about building long-term wealth, making the switch could be the step that helps your money finally outpace inflation