Transferring money from an ISA to a current account
By transferring funds from an Individual Savings Account (ISA) to a current account, you’ll be able to spend the money you’ve set aside. However, that money will no longer benefit from the tax protections that come with an ISA.
Below we cover why you might want to withdraw money from an ISA, the tax implications of doing so, and how you can add funds to your Zopa Biscuit account.
What’s the difference between an ISA and a current account?
An ISA isn’t a current account. They have very different purposes, and are best used together.
ISA | Current account | |
| Use | Long-term savings. | Everyday spending. |
| Access | There may be restrictions on when and how frequently you can withdraw funds, especially if you've signed up to a fixed-rate ISA. | You have immediate access to any money in your current account. |
| Interest | ISAs normally have higher interest rates than free current accounts. With a Zopa Smart ISA, you can get up to 4% AER*. | Most current accounts don’t offer interest – however, Zopa’s Biscuit accountgives you 2% AER* on your balance. |
| Tax | You won’t pay tax on any interest earned on cash or investments held in an ISA. | If you earn interest on your current account balance, you’ll be taxed if that interest is more than your Personal Savings Allowance. |
Why would you want to move money from your ISA to your current account?
While ISAs are designed for long-term saving, there are times you might want or need to transfer money from your ISA to your current account:
Hit your savings goal: you may’ve simply reached your target and are ready to spend the money you’ve saved.
Financial emergency: you may have a financial emergency that requires you to access the funds in your ISA. For instance, you might need to make unexpected repairs to your car or replace your busted boiler at home.
Access to cash: if times are tough, you may need to transfer some money from your ISA to your current account to cover your everyday spending, such as bills and food shopping.
What is the impact of moving money out of your ISA?
There are a number of financial implications to transferring money from an ISA to a current account that you should be aware of before withdrawing your funds:
Tax
The main benefit of an ISA is that you don’t pay tax on the interest you earn.
You won’t be taxed for just withdrawing money from an ISA. However, if you transfer funds to a current account and you earn interest on your balance, that interest will be taxed if you exceed your Personal Savings Allowance.
Find out more about your Personal Savings Allowance in our guide to current accounts vs savings accounts.
Annual ISA allowance
Every tax year, you can save up to £20,000 across cash, stocks and shares and innovative finance ISAs. But by withdrawing money from your ISA, you may affect your allowance:
| Flexible ISAs | Non-flexible ISAs |
If you have a flexible ISA, such as Zopa’s Smart ISA, you can withdraw money and put it back within the same tax year without eating into your £20,000 ISA allowance. For example, if you deposit £15,000 of your £20,000 allowance, and withdraw £5,000 in the same tax year, you can add another £10,000 to your ISA. | If your ISA isn’t flexible, the money you withdraw won’t be added back to your annual ISA allowance. For example, if you deposit £15,000 of your £20,000 allowance, and withdraw £5,000 in the same tax year, you can still only add another £5,000 to your ISA. |
Interest
Most current accounts don’t offer interest on your balance. So by moving your money from an ISA to a current account, you may not be maximising the amount of interest you can earn.
You should also be aware that some ISA providers will reduce your interest rate if you exceed a certain number of withdrawals in a calendar year.
Fees
Some ISAs have rules about when you can withdraw money, and may require you to pay a penalty fee.
How to transfer money from an ISA to your current account
With Zopa, you can transfer money from your Smart ISA to your Biscuit current account online using our app. The process differs slightly between our Access ISA pots and our Fixed Term ISA pots:
Access ISA pots
You can withdraw money from your Zopa Access ISA at any time. All you need to do is:
Open your Zopa Bank app.
Go to Smart Saver in the app and tap Withdraw.
Select the Access ISA pot you want to withdraw from.
Select your linked Biscuit bank account.
Confirm your withdrawal.
Fixed Term ISA pots
Once your Fixed Term ISA pot comes to term, you can follow the same steps as above to withdraw your savings to your linked bank account.
However, if you want to withdraw funds before the end of the term, you’ll need to break the fixed term and pay an interest charge.
This means you can’t withdraw only some of your Fixed Term ISA and keep it open. Instead, you’ll need to withdraw the full balance to your linked bank account, or move the funds to an Access ISA pot and then withdraw your required amount.
Find out more about our Fixed Term ISA interest charges.
What if your ISA isn’t with Zopa, but your current account is?
If your ISA isn’t with Zopa, and you want to withdraw money to your Biscuit current account, you’ll need to follow the steps required by your ISA provider. You can find this information by logging into your ISA account.
You’ll need your Biscuit sort code and account number to complete the withdrawal. To find your details, you should:
Open your Zopa app and select your Biscuit account.
Select ‘Manage’ and then ‘Account details’.
Make a note of your account number and sort code.
How can I open a current account or an ISA with Zopa?
To open a Biscuit current account or ISA with Zopa, all you need to do is download our banking app and fill out an application.
It’s quick and easy to apply, so what are you waiting for? Start saving and earning today!
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*AER stands for 'annual equivalent rate'. We pay you interest on a monthly basis, but AER shows you the rate you’d get if this monthly interest was compounded and paid once a year instead. We provide an AER to make it easier for you to compare our rates with other providers.
FAQs
Can you transfer money from an ISA to a current account online?
You can transfer money from an ISA to a current account online with ease. Zopa is an online-only bank, meaning you won’t need to visit a physical location, or find a printer, in order to withdraw funds from your Smart ISA.
How long does it take to transfer money from an ISA to a current account?
How long it takes to transfer money from an ISA to a current account will depend on the type of ISA you have, and your provider. It can range from an instant deposit when withdrawing from certain cash ISAs, to 30 to 90 days for an innovative finance ISA.
Got a question? Contact us
If you have any questions about transferring money from an ISA to a current account, please feel free to contact us directly over live chat or on the phone.
Alternatively, you can find everything you need to know in the Help sections of our Biscuit bank account and Smart ISAs.
