Hands tied with Nutmeg?

howzat92 · 22 October 2017 at 11:24AM

Good morning all,

I am a little concerned that Nutmeg still do not have the functionality to transfer in a help to buy ISA to my LISA account. I opened my LISA in April and naively assumed this feature would become available shortly after.

If this functionality is not available by 5th April 2018 would I be right in thinking I will lose out as I will be unable to combine my Nutmeg LISA and Halifax H2B ISA? From what I have read on MSE this is the deadline and I would get a bonus from what I have saved in H2B ISA?

eskbanker · 22 October 2017 at 12:27PM

You can still transfer a HTB ISA into a LISA after 5 April 2018, but you wouldn't be able to take advantage of the one-off concession, applicable this tax year only, that allows pre-17/18 HTB contributions not to count towards the annual LISA allowance.

One option is to transfer your LISA from Nutmeg to one of the LISAs that does allow HTB transfers (https://www.moneysavingexpert.com/savings/lifetime-ISAs#bestbuysstocks), get your HTB money in and then transfer back to Nutmeg (if you feel they're better than the others).

howzat92 · 22 October 2017 at 4:34PM

That's a good idea really appreciate the help! I will probably just transfer to another LISA then. Would you say that any particular LISA is more secure in terms of the company collapsing than another? Should I be worried about putting my money from Halifax (a fairly large bank) into Nutmeg which is relatively new?

Alexland · 26 October 2017 at 10:35PM

You will get £50k of FSCS protection investing with Nutmeg and they should be keeping client assets separate to their operating business anyway. The underlying ETF funds used by Nutmeg are from large and reputable fund managers.

Plus · 31 October 2017 at 9:17PM

A message Nutmeg sent me:

Nutmeg wrote:

All money contributed to a Help to Buy ISA before LISAs launched (ie, before 6 April 2017) can be transferred in without affecting your LISA allowance.

More information can be found at the following link:

https://blog.moneysavingexpert.com/2016/07/25/24984/

I would like to stress that the transfer feature is not currently available on the Nutmeg platform. We are aiming to have this completed before the end of the current tax year but I cannot guarantee whether that will be the case.

We will notify customers if/when the feature is available

(amusing that it cites MSE as a reference)

If nothing turns up by about late February, I would think about transferring LISA away - leaves some time before the end of the tax year.

Alexland · 31 October 2017 at 10:41PM

Sounds like they are struggling to deliver the functionality - for a business that primarily defines itself as digital tech enabled this is highly embarrassing but at least they are being frank on where you stand.

TFM2012 · 31 October 2017 at 11:01PM

From Nutmeg:

Help to Buy ISA transfer FAQ
Can I transfer my Help to Buy ISA to a Nutmeg LISA?

No, we won’t be providing this service.

Why aren’t Nutmeg offering this service?

We made attempts to build this service for the first 6 months of the 2017/18 tax year. We set ourselves a deadline of November 5th to be completely confident we could deliver this for customers. Unfortunately, we just couldn’t deliver the kind of certainty we were comfortable with. We wanted to be decisive and give customers enough time to make other arrangements for their Help to Buy ISA before the tax year end deadline.

Can I transfer my Nutmeg LISA to another provider?

Yes, you can transfer your Nutmeg LISA to another provider. We won’t charge you any fees to do so.

Why is it important for me to transfer my Help to Buy ISA to a LISA before 6th April 2018?

If you transfer your Help to Buy ISA to a LISA after April 5th 2018 it will count towards your LISA contributions for the relevant tax year. By transferring within the 2017/18 tax year you can add your Help to Buy ISA to your LISA without using any of your £4,000 LISA allowance. So if you transfer £2,000 from a Help to Buy ISA to a LISA and contribute £4,000, then at the end of the 2017/18 tax year you would have £6,000 in a LISA to claim the 25% bonus. You can use your LISA once it has been open for 12 months.

What are my options with the Help to Buy ISA?

Unfortunately we can’t provide you with personalised financial advice, but the options as we see them are as follows:

Option 1: If you already have a Nutmeg LISA, but you want to use you Help to Buy ISA as a contribution, you can transfer your Nutmeg LISA elsewhere to a provider that can accept your Help to Buy ISA as a transfer. We feel this will be the best option if you are planning on using the Help to Buy ISA as a contribution for your LISA. You won’t incur any fees from us and you’ll be able to use funds contributed in previous tax years to claim the government bonus.

Option 2: Continue to contribute to your Help to Buy ISA, bearing in mind you can only claim a bonus from one of either the Help to Buy or Lifetime ISA when purchasing your first home. You can contribute to a Help to Buy ISA until 30th November 2029 and must claim your 25% government bonus by 1st December 2030. You can contribute a maximum of £12,000, therefore there is a maximum government bonus of £3,000. You can find out more on the government's Help to Buy ISA FAQ page.

Option 3: If you wish to continue investing in your LISA with Nutmeg and still want to combine it with your Help to Buy ISA, you will need to withdraw the money from your Help to Buy ISA and contribute it to your Nutmeg LISA. You should clarify with your current provider whether there will be a penalty for early withdrawal from the Help to Buy ISA, and also be aware that the contribution will count towards your 2017/18 LISA allowance. The bonus for the Help to Buy and the LISA are the same — a 25% government top up on your contributions. Just to reiterate, you can only use one of these when purchasing your first home.

Can someone clarify if this is even possible, Im new to ISAs is it possible to transfer in the same year as opening?

Plus · 1 November 2017 at 12:34AM

That must have come suddenly today - the email I quoted was sent to me at 10:48 this morning!

Since ISAs are only reported to HMRC at the end of the tax year, the way current-tax-year transfers work is they essentially rewrite history to be as if you took out the new ISA from the beginning, and the ISA you are transferring from never happened. Only the new ISA reports to HMRC at the end of the year, and as long as you don't exceed the limits everything is fine. This is also the reason why you have to transfer all current year contributions together, because it would be reported as you having opened two of the same class of ISA in the same year which isn't allowed.

So you should be able to transfer current years money elsewhere and start again with a 'new' ISA.

eskbanker · 1 November 2017 at 1:10AM

TFM2012 wrote: »

Why is it important for me to transfer my Help to Buy ISA to a LISA before 6th April 2018?

If you transfer your Help to Buy ISA to a LISA after April 5th 2018 it will count towards your LISA contributions for the relevant tax year. By transferring within the 2017/18 tax year you can add your Help to Buy ISA to your LISA without using any of your £4,000 LISA allowance. So if you transfer £2,000 from a Help to Buy ISA to a LISA and contribute £4,000, then at the end of the 2017/18 tax year you would have £6,000 in a LISA to claim the 25% bonus. You can use your LISA once it has been open for 12 months.

Nutmeg haven't captured the key point about such transfers, i.e. that only pre-17/18 HTB money transferred to a LISA during this tax year falls outside the £4K LISA limit, so anything contributed to a HTB ISA since 6 April 2017 that's subsequently transferred to a LISA this tax year does count towards this year's £4K LISA annual allowance.

Chapuys · 1 November 2017 at 2:58PM

TFM2012 wrote: »

From Nutmeg:

Help to Buy ISA transfer FAQ
Can I transfer my Help to Buy ISA to a Nutmeg LISA?

No, we won’t be providing this service.

Why aren’t Nutmeg offering this service?

We made attempts to build this service for the first 6 months of the 2017/18 tax year. We set ourselves a deadline of November 5th to be completely confident we could deliver this for customers. Unfortunately, we just couldn’t deliver the kind of certainty we were comfortable with. We wanted to be decisive and give customers enough time to make other arrangements for their Help to Buy ISA before the tax year end deadline.

[...]

*snip*

I received this email this morning. To say that I will now have to open another Lifetime ISA and wait another year to access the bonus money to buy a house is quite annoying to say the least. I plan to complain but doubt anything will come of it.

Alexland · 1 November 2017 at 4:56PM

Just got an email from AJ Bell confirming they are now able to transfer a HTB ISA into their S&S LISA.

Hands tied with Nutmeg?

Comments

Categories

Get our FREE Weekly email full of deals & guides - and it’s spam-free