If you're thinking about growing your money, you might be considering moving funds from a Cash ISA into investments. Whether you're looking at a Stocks and Shares ISA or a General Investment Account, this guide will help you understand how to make the switch and what to watch out for.
You'll learn:
Important
As your money is invested, the value of your investments can rise and fall, so you could get back less than you put in. Tax rules can change, and the value of any tax benefits depends on your personal circumstances.
You can withdraw money from a Cash ISA and use it to invest. But it’s important to understand how this works, especially if you're aiming to keep your savings tax-efficient.
You can either:
Transferring is usually the better option if you want to keep your ISA allowance intact.
Learn more in our Ultimate Guide to Cash ISAs.
If you’re ready to invest, here’s how to get started.
Withdrawing means taking the money out of your ISA and putting it into a regular account before investing. By withdrawing, you lose the ISA tax status on the withdrawn money. Transferring moves your money straight into another ISA, which helps protect your tax-free allowance. (If it’s a flexible cash ISA, withdrawn funds could simply be put back into the same ISA).
A flexible ISA lets you take money out and put it back in during the same tax year without affecting your allowance. Many Cash ISAs aren’t flexible, so check your product provider's terms and conditions before withdrawing.
When reinvesting money withdrawn from an ISA, you have several options. You could choose a Stocks and Shares ISA, which keeps your investments within a tax-efficient wrapper, or a General Investment Account (GIA). A GIA offers flexibility but does not provide tax benefits, meaning gains, dividends and interest may be subject to tax.
Beyond these, you’ll also find a range of managed portfolios and DIY investment platforms in the market. The right choice depends on your goals, risk appetite and how hands-on you want to be with managing your investments.
Each tax year, you can put up to £20,000 into ISAs. If you withdraw from a non-flexible ISA, that money counts as spent – even if you reinvest it later. So, you could lose part of your allowance.
Flexible ISAs let you take money out and put it back in without affecting your limit, but they’re less common. Always check the provider's terms and conditions to confirm how this works.
When you withdraw from a Cash ISA, the money is no longer exempt from tax. If you invest it outside of an ISA, you might pay tax on any gains, dividends or interest.
To stay tax-efficient, consider transferring into a Stocks and Shares ISA instead of withdrawing. Here, you still get your £20,000 annual ISA allowance with tax-free benefits. Remember, this £20,000 allowance applies across all your ISAs combined, not just Stocks & Shares ISAs.
When you open an ISA, it will either be ‘flexible’ or ‘non-flexible’:
Many Cash and Stocks & Shares ISAs are non-flexible, so it’s important to check before making a move. If you want to reinvest tax-free, transferring might be an option worth considering.
Once you’ve withdrawn, you have a wide range of investment options available. These can include:can invest in:
Think about what matters most to you: tax efficiency, flexibility, how long you want to invest and the level of risk you’re comfortable with. Your capital is at risk.
There are many factors that you should consider if you’re thinking about withdrawing money from your Cash ISA to invest. Ask yourself these questions:
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