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  • FIRST POST
    • MSE Helen Saxon
    • By MSE Helen Saxon 16th Mar 16, 5:06 PM
    • 75Posts
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    MSE Helen Saxon
    Lifetime ISAs guide
    • #1
    • 16th Mar 16, 5:06 PM
    Lifetime ISAs guide 16th Mar 16 at 5:06 PM
    Hi!

    This is the discussion thread for the



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    Thanks folks,
Page 3
    • Plus
    • By Plus 28th Mar 16, 10:37 AM
    • 217 Posts
    • 171 Thanks
    Plus
    I am not in a position to invest right now as I have a long term illness. However, next year when I turn 40 (before the cut off) my Folks are planning to give me money as an early gift. Can I open an ISA with that money so even if my condition hasn't changed, I won't miss out?
    Originally posted by ZaberStorm
    I don't think you can. If you've never owned a property you can open a HTB ISA now and that should continue after the LISA is available, but if you're 40 or over on 6th April 2017 then you can't open a LISA to transfer it into. Depending on what you plan to do with it the HTB may or may not be suitable, but I think you can open one and then make minimal or no deposits (subject to the T&C of your provider) until you're in a position to do so - but after which you can only add £200 per month.

    Also, if you die before you are 60 does the money get paid to your next of kin or will the State pinch it back?
    Since it's a savings account the money you paid in is yours, though I'm unclear on the status of the bonus.
    • Plus
    • By Plus 28th Mar 16, 10:43 AM
    • 217 Posts
    • 171 Thanks
    Plus
    An interesting side-question: how does the LISA relate to the Flexible ISA provisions?

    Obviously flexibility depends on the provider offering it, which presumably many won't. But I wonder if there's any scope for withdrawing and then paying back money into the LISA. For instance, you want some cash as a bridging loan when buying a house. Withdraw cash (paying 5% fee), do transaction, pay cash back into LISA before the end of the tax year. Is the LISA in scope to do that?

    The 5% fee is a hefty disincentive, of course, but it could be a useful pot to raid for temporary cash if it were possible.
    • Phil1482
    • By Phil1482 28th Mar 16, 1:37 PM
    • 7 Posts
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    Phil1482
    Hi there,

    I have a quick question about first-time buyer status and LISA's. If I open one without having owned a property, but inherit a portion of one before I manage to buy one, will I lose the bonus for purchasing? i.e. Would I need to wait until I'm 60 to receive. Thanks for your help.
    • colsten
    • By colsten 28th Mar 16, 1:43 PM
    • 8,676 Posts
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    colsten
    The first time buyer bonus will only be available to people who have never owned an interest in a property (same criteria as fot the HTB ISA).

    https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/508176/Lifetime_ISA_final.pdf
    • Phil1482
    • By Phil1482 28th Mar 16, 3:54 PM
    • 7 Posts
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    Phil1482
    The first time buyer bonus will only be available to people who have never owned an interest in a property (same criteria as fot the HTB ISA).
    Originally posted by colsten
    Thanks. This makes me quite nervous about investing money in the ISA owing to the 5% charge. I wouldn't mind losing the government bonus if circumstances change, but it could take my wife and I 10-15 years to save for a house and if either of our parents died we'd get a small interest in a home, but not enough to justify waiting until 60 to return the savings.
    • grey gym sock
    • By grey gym sock 28th Mar 16, 4:48 PM
    • 4,053 Posts
    • 3,524 Thanks
    grey gym sock
    Thanks. This makes me quite nervous about investing money in the ISA owing to the 5% charge. I wouldn't mind losing the government bonus if circumstances change, but it could take my wife and I 10-15 years to save for a house and if either of our parents died we'd get a small interest in a home, but not enough to justify waiting until 60 to return the savings.
    Originally posted by Phil1482
    this is a legitimate point, but you should consider whether this is a risk worth taking. there are a few ways of looking at it ...

    how does the (estimated) size of the potential inheritance (not just the share in a property, but total amount inherited, if there if more beside a property) compare to what you might lose with the 5% penalty? (and to what you might gain, if you get the 25% bonus?)

    and how likely are you to take the 5% hit, based on how long you'd expect it to take before you're ready to buy a property, compared to life expectancies of parents (based on their ages)?

    that gives you potential gain vs potential loss, with approximate probabilities.

    or, to look at it another way: would the inheritance be enough to enable you to buy a property immediately, after paying the 5% penalty? if it would, then you could say that using LISA maximizes your chances of buying a property sooner.

    you could also start with HTB ISA, rather than LISA, and consider whether to transfer it to a LISA at the last possible point (viz. 5 april 2018).
    Last edited by grey gym sock; 28-03-2016 at 5:19 PM.
    • billyknapper
    • By billyknapper 28th Mar 16, 9:59 PM
    • 1 Posts
    • 0 Thanks
    billyknapper
    Buying a house
    I have a question...
    I set up a Help To Buy ISA in December and am buying a house in July. After seeing you can get the 'double-whammy' bonus by transferring funds into a Lifetime ISA is it worth me not using my Help To Buy on my house purchase and instead transfer it across in April '17?

    I know there was eligibility checks that were made in order for me to open the HTB account but now that it's open can I not use it and still get the bonus for transferring it across even though I will in fact own a house when applying for the bonus? Obviously it makes quite a lot of difference (£2,800 if I've done my maths correct) but I don't want to risk losing the HTB bonus in order to get the double bonus as you've suggested. I have a feeling they will do 'another' eligibility check when I claim the bonus so I wouldn't be able to take advantage of it.
    • Lingua
    • By Lingua 28th Mar 16, 10:49 PM
    • 169 Posts
    • 178 Thanks
    Lingua
    this is a legitimate point, but you should consider whether this is a risk worth taking. there are a few ways of looking at it ...

    how does the (estimated) size of the potential inheritance (not just the share in a property, but total amount inherited, if there if more beside a property) compare to what you might lose with the 5% penalty? (and to what you might gain, if you get the 25% bonus?)

    and how likely are you to take the 5% hit, based on how long you'd expect it to take before you're ready to buy a property, compared to life expectancies of parents (based on their ages)?

    that gives you potential gain vs potential loss, with approximate probabilities.

    or, to look at it another way: would the inheritance be enough to enable you to buy a property immediately, after paying the 5% penalty? if it would, then you could say that using LISA maximizes your chances of buying a property sooner.

    you could also start with HTB ISA, rather than LISA, and consider whether to transfer it to a LISA at the last possible point (viz. 5 april 2018).
    Originally posted by grey gym sock
    I am in a similar position where I may inherit a share of a property between opening the ISA and buying my first house.

    I wonder if it would be possible to pass on ownership of the inherited property to the other family member, purchase my own home, then purchase the share of the property from the family member. Of course, that risks a change in property price in the meanwhile, but that's unlikely to be a large amount in this area. The family member is also trustworthy, so that isn't an issue.

    Still, a lot to consider. After all, the government would be rather unfair to punish a person for inheriting property if it is unexpected (unexpected death or inheriting from family member you did not know about).
    • colsten
    • By colsten 29th Mar 16, 12:42 AM
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    colsten
    After all, the government would be rather unfair to punish a person for inheriting property if it is unexpected (unexpected death or inheriting from family member you did not know about).
    Originally posted by Lingua
    Excuse me? If you had an inheritance, or inheritance windfall - however sad the circumstances of the inheritance might have been -, you'd expect the taxpayer to give you something extra on top?
    • JeanLaCritique
    • By JeanLaCritique 30th Mar 16, 3:47 PM
    • 1 Posts
    • 0 Thanks
    JeanLaCritique
    Transferring from HTB
    Hello All.

    I opened a help to buy with Halifax in December and have been putting the maximum in each year.

    Am I best served transferring this into a LISA once it becomes available. Are there any downsides to the LISA over HISA? Will LISA also include a gross interest like banks have offered?

    As I see it the HISA allows me to pay in £2,400 per year and the LISA will allow £4,000 per year so I can get an extra £250 per year in bonuses. This was less noticeable in the first year of comparison as I made use of the extra £1000 pay in during opening the account but looks less impressive once the numbers go into year 2.

    Many thanks.
    • N1AK
    • By N1AK 31st Mar 16, 11:56 AM
    • 2,847 Posts
    • 3,793 Thanks
    N1AK
    Now I cant get access to either of the H2B or LISA for that purpose. I'm sure I'm not the only one in this situation - plenty of people come out of divorce badly and end up in rented...why not give these people a chance?
    Originally posted by londonlydia
    Unfortunately they decided to put a cut off in place to avoid the risk that people would use buying additional property to get a government handout or quick access to the cash. Obviously this leads to some groups, like yourself, being excluded but is that any more unfair than the fact that someone earning £100k and renting could benefit from this, but someone earning £20k and living in a tiny box flat they've scrimped to get a mortgage on can't?
    Having a signature removed for mentioning the removal of a previous signature. Blackwhite bellyfeel double plus good...
    • Paintitred
    • By Paintitred 1st Apr 16, 9:15 PM
    • 1 Posts
    • 0 Thanks
    Paintitred
    HTB to LISA
    So, if I open an HTB later this month and contribute the maximum I.e. £1000 + £200 x 12 = £3400.

    Then if I transfer to a LISA in April '17, the 25% £850 HTB bonus will only become available when I purchase my first property but will not be added to the account in the meantime.

    Unlike the LISA bonuses which are added to the account annually?
    • colsten
    • By colsten 1st Apr 16, 10:14 PM
    • 8,676 Posts
    • 7,319 Thanks
    colsten
    http://blog.moneysavingexpert.com/2016/04/01/the-help-to-buy-isa-v-lifetime-isa-which-should-first-time-buyers-get/
    • flubberfig
    • By flubberfig 2nd Apr 16, 12:50 PM
    • 6 Posts
    • 31 Thanks
    flubberfig
    Can we input into government consultation?
    As somebody who has already go onto the mortgage wheel I'd only be able to take advantage of this for saving for retirement.

    As I am currently stashing whatever I can afford into ISAs toward retirement because I fully intend to stop work before I can legally access my pensions the Lifetime ISA at a glance looked amazing - then I saw the age 60 part and penalties.

    What I really need to know once this is launched is what guarantees would we have that we really can access our cash without penalties at 60 or is this going to be another ever increasing age target?

    What I would like to try to push in the consultation is the idea that penalties should not apply to withdraw cash from a much younger age - 50 seems fair given after 50 the government wouldn't add any further bonus.

    Does anyone know whether the public will be able to feed into the consultation? If not could MSE gather our points and make them?
    • masonic
    • By masonic 2nd Apr 16, 12:54 PM
    • 9,126 Posts
    • 6,273 Thanks
    masonic
    What I really need to know once this is launched is what guarantees would we have that we really can access our cash without penalties at 60 or is this going to be another ever increasing age target?
    Originally posted by flubberfig
    There are no guarantees. Just like there are no guarantees about state pension age.

    What I would like to try to push in the consultation is the idea that penalties should not apply to withdraw cash from a much younger age - 50 seems fair given after 50 the government wouldn't add any further bonus.

    Does anyone know whether the public will be able to feed into the consultation? If not could MSE gather our points and make them?
    It is unlikely any Government is going to incentivise people to leave the workforce more than 10 years before their state pension age. People qualifying for the LISA will likely not be able to access any personal pensions before 60, perhaps they will have to wait even later.

    I plan to fund the first few years of my retirement from a normal S&S ISA. That doesn't seem like much of a hardship, really.
    • flubberfig
    • By flubberfig 2nd Apr 16, 6:50 PM
    • 6 Posts
    • 31 Thanks
    flubberfig

    It is unlikely any Government is going to incentivise people to leave the workforce more than 10 years before their state pension age. People qualifying for the LISA will likely not be able to access any personal pensions before 60, perhaps they will have to wait even later.
    Originally posted by masonic
    I expect that 60 or even later is the likelihood too. However I don't see why the government shouldn't incentivise leaving the workforce before pension age - it frees up jobs and assuming that the person leaving the workforce is able to fund their lifestyle (for example with LISA savings) should have no negative affect on them.
    • colsten
    • By colsten 2nd Apr 16, 8:00 PM
    • 8,676 Posts
    • 7,319 Thanks
    colsten
    I expect that 60 or even later is the likelihood too. However I don't see why the government shouldn't incentivise leaving the workforce before pension age - it frees up jobs and assuming that the person leaving the workforce is able to fund their lifestyle (for example with LISA savings) should have no negative affect on them.
    Originally posted by flubberfig
    Do you have evidence that jobs older people leave will go to younger ones? Ask some eminent economists and they would tell you about the lump of labour fallacy.

    As I am in my sixties now, I am unlikely to be around to see the effects of LISA on society but I firmly believe it is not a taxpayer-subsidised early retirement scheme. If you want to retire before you can draw your occupational or state pension or both, you have to make this happen on your own accord. It's not impossible to achieve and I would encourage everybody to aim for it.
    • masonic
    • By masonic 2nd Apr 16, 8:19 PM
    • 9,126 Posts
    • 6,273 Thanks
    masonic
    I expect that 60 or even later is the likelihood too. However I don't see why the government shouldn't incentivise leaving the workforce before pension age - it frees up jobs and assuming that the person leaving the workforce is able to fund their lifestyle (for example with LISA savings) should have no negative affect on them.
    Originally posted by flubberfig
    The Government needs as many people capable of work and of working age to be in paid employment. It needs them to work and pay taxes on their income. People who go economically inactive will start contributing less in taxes and may well have fewer assets beyond state pension age that can be used to pay for their care late in life, or perhaps retiring earlier will mean that they end up getting a larger means tested state pension - who knows what is on the cards.

    If you are seriously intending on spending your time and energy trying to persuade the Government to let you have access to your LISA, complete with bonus and without penalty, at 50 then good luck, but I think you are wasting your time.
    • blue_mango
    • By blue_mango 3rd Apr 16, 9:02 AM
    • 360 Posts
    • 1,338 Thanks
    blue_mango
    I would like to open a help to buy isa and then transfer it to LISA. Possible, right? When I'm opening HTB isa, is it okay to let the bank know about my plans to transfer it later on?
    May Grocery Challenge : £65/£100
    • masonic
    • By masonic 3rd Apr 16, 9:09 AM
    • 9,126 Posts
    • 6,273 Thanks
    masonic
    I would like to open a help to buy isa and then transfer it to LISA. Possible, right? When I'm opening HTB isa, is it okay to let the bank know about my plans to transfer it later on?
    Originally posted by blue_mango
    Yes it is possible. Why tell your bank? It's unlikely they will be fully up to speed on the changes coming into effect this coming Wednesday, let alone changes that are planned in a years time.
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