Why did NatWest wrongly tell me to cash in my Isa and lose its tax-free wrapper if I wanted to transfer it? SALLY SORTS IT

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By SALLY HAMILTON

Updated: 07:00 BST, 18 September 2026

In early August, I contacted NatWest Bank regarding my two-year fixed rate cash Isa that will mature in November 2027, as I was considering transferring it to another provider.

I wanted to know the financial penalty for leaving the fixed deal early. 

I was told I could not transfer a fixed-rate account before its maturity date and that my only option would be to close the account, pay the penalty and reinvest in another Isa.

I said that can’t be right as I’d lose the tax-free Isa status of my funds, but I was told it was a new ruling to stop people always transferring Isas.

I looked online at the Government website and saw nothing that said my request was against the rules. Can you help?

G.D., Essex.

Natwest told a reader they could not transfer a fixed-rate Isa account before its maturity date and that their only option would be to close the account and pay a penalty

Sally Hamilton replies: I found your email alarming. Being told not just by one, but two, NatWest staff that you needed to cash in your fixed-rate cash Isa to open a new fixed-rate account is misleading as it would have been financially damaging if you had taken their guidance.

The first rule of transferring any Isa, whether cash or investment style, is that you never close an old account before switching. This is because the valuable tax advantages of being protected from future income and capital gains tax are immediately lost.

In your case, completing a transfer form with a new provider would mean you could transfer the full sum already saved into the new Isa and protect any future interest earned from savings and income tax.

This was important for you, with nearly £65,000 of savings already sheltered from tax. Had you closed the incumbent plan, you would only have been able to salt away £20,000 in a new fixed-rate Isa, which is the maximum annual allowance permitted for new deposits into an Isa.

Thankfully, you didn’t act on the false information. You asked the bank’s online bot for clarification, which gave sounder advice than the humans, confirming such a seamless transaction was possible, even if early access penalty charges would apply.

I contacted NatWest to express my concern about what you’d been told. On investigation it confirmed you had been given duff information. A NatWest spokesman says: ‘We sincerely apologise for the incorrect information that was provided.’

To make up for the inconvenience, the bank allowed you to transfer your funds to its easy access cash Isa with no penalties, which saved you a three months’ interest penalty of £639.

The bank admitted it had fallen ‘short of the high standards of service that we set for ourselves and that our customers rightly expect’.

• Write to Sally Hamilton at Sally Sorts It, Money Mail, Northcliffe House, 2 Derry Street, London W8 5TT or email sally@dailymail.co.uk include phone number, address and a note addressed to the offending organisation giving them permission to talk to Sally Hamilton. Please do not send original documents as we cannot take responsibility for them. No legal responsibility can be accepted by the Daily Mail for answers given. 

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