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Abbey warns of transfer restrictions on Isas

Four of the five “best buys” Isa accounts do not allow transfers in and one in five ISAs does not allow transfers in according to Abbey.

Abbey is warning people to watch out for restrictive transfer conditions when choosing a new Isa provider and says that one in 11 Isa accounts has transfer exit conditions.

Abbey’s research shows that one in five Isa accounts do not allow transfers in which includes four out of five “leading “ accounts, with high market rates.

Restrictive conditions include up to 30 days notice required, an interest penalty on the amount transferred and an administration fee for the amount transferred.

Abbey says these restrictive conditions could impact people’s ability to switch to make the most of their tax free allowance.

Abbey head of savings and investments Reza Attar-Zadeh says: “With the average transfer balance of Isas at £12,000, savers need to look carefully at the transfer conditions on cash mini Isas. It is disappointing that many of the leading rate cash Isas do not allow transfers in – thereby restricting the tax-free benefits of Isa investing to just £3,000.

“More strange is the myriad conditions on transferring out. Savers could end up paying to transfer out their money, or subject to time locks. As we’ve seen in football, restrictive transfer conditions can be expensive and cause delays.

“We urge savers to fully use their Isa allowance to ensure they minimise their tax bill.”

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