Lifetime ISAs guide

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  • owenjt
    owenjt Posts: 107 Forumite
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    Have looked through the website and on here and just wanted to confirm I'm correct in my thinking about HTB and LISA and my situation...

    I have a HTB ISA paying 3.50% and am paying in the max £200 a month (currently have just over £4200). I plan to open a LISA now and then in March 2018 transfer my HTB into the LISA and top up with £1800 (therefore using my £4000 allowance - 11 months x £200 HTB = £2200 + £1800). Then I should get a £1900 bonus in April 2018:

    £900 interest on £3600 paid into HTB before April 2017
    £550 interest on £2200 paid into HTB April 2017 - March 2018
    £450 interest on £1800 paid into LISA March 2018

    Is this correct and is this the best way to get the maximum return on my investment?
  • eskbanker
    eskbanker Posts: 31,066 Forumite
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    The principles are correct, although, as pointed out in previous posts, it's a bonus not interest (i.e. it's not dependent on how long money has been in the account(s)).

    However, your HTB account will have interest applied at the time of transferring (it should also have had some applied before that too if it's been open for over a year) and you'll get 25% of that too.
  • owenjt
    owenjt Posts: 107 Forumite
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    eskbanker wrote: »
    The principles are correct, although, as pointed out in previous posts, it's a bonus not interest (i.e. it's not dependent on how long money has been in the account(s)).

    However, your HTB account will have interest applied at the time of transferring (it should also have had some applied before that too if it's been open for over a year) and you'll get 25% of that too.
    Ah yes, you are correct. Meant bonus not interest. Good point about the interest from the HTB - this won't count as part of the £4K LISA limit though will it?

    So is this the best way to maximise my investment (pending I can transfer my HTB in March 2018)?
  • Ed-1
    Ed-1 Posts: 3,892 Forumite
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    owenjt wrote: »
    Ah yes, you are correct. Meant bonus not interest. Good point about the interest from the HTB - this won't count as part of the £4K LISA limit though will it?

    So is this the best way to maximise my investment (pending I can transfer my HTB in March 2018)?

    It will if it was accrued/paid after 5th April 2017.
  • owenjt
    owenjt Posts: 107 Forumite
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    Another couple of questions to clarify:
    • Can you transfer your LISA to another provider penalty free, should a better account become available?
    • Is it correct that from April 2018 the LISA will pay the 25% bonus on a monthly basis on your contribution for the previous month i.e. I could put in £4000 in April 2018 and receive a £1000 bonus in May 2018?
  • eskbanker
    eskbanker Posts: 31,066 Forumite
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    owenjt wrote: »
    Can you transfer your LISA to another provider penalty free, should a better account become available?
    Depends on whether the receiving one accepts inbound transfers (they're not obliged to) - also, I believe that the currently available S&S LISAs typically charge fees for transferring out.
    owenjt wrote: »
    Is it correct that from April 2018 the LISA will pay the 25% bonus on a monthly basis on your contribution for the previous month i.e. I could put in £4000 in April 2018 and receive a £1000 bonus in May 2018?
    Yes.
  • Kami_J
    Kami_J Posts: 17 Forumite
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    I have an HTB that I am still paying into and opened a 100 Nutmeg LISA in April. I'm planning to buy in late 2018 / early 2019.

    I have intended to switch to a cash LISA when it becomes available, but seeing how low the Skipton rate is made me question that. Is there a good reason NOT to stay with Nutmeg, transfer in my HTB in March 2018 and use it when bonuses hit?

    I know the S&S are more volatile than cash, but with inflation as it is, Skipton's 0.5% is a losing game. I picked the lowest risk profile on Nutmeg, so I am thinking that in the worst case, I will lose a little bit, but potentially can gain a bit more - but overall the swing in either direction won't be much so why bother with switching? Am I missing something?
  • greenglide
    greenglide Posts: 3,301 Forumite
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    I know the S&S are more volatile than cash, but with inflation as it is, Skipton's 0.5% is a losing game. I picked the lowest risk profile on Nutmeg, so I am thinking that in the worst case, I will lose a little bit, but potentially can gain a bit more - but overall the swing in either direction won't be much so why bother with switching? Am I missing something?
    Stock market crash next week, month? Pound sinks 20%. Political instability grows?

    Something unexpected can cause major changes in investments over a year or so.

    You are happy to take this risk because Skipton are only paying 0.5% ?
  • System
    System Posts: 178,094 Community Admin
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    edited 17 June 2017 at 12:09PM
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    Ed-1 wrote: »
    You're not opening two cash LISAs in one year. A LISA is only open once it is funded. So you can 'open' a new one with nil balance and transfer another one in without a problem.

    It's the same as any other ISA in that respect.


    Good point. Regarding this...

    I opened my Nutmeg S&S LISA in May (with the minimum, mandatory £100)
    I have since opened a Skipton CASH LISA (and did so funding with £1 -- as there was no option for £0 on the online application form "£1+" ...)

    I'm assuming this isn't a problem as one is a S&S Lifetime ISA and the other is CASH Lifetime ISA ... PRETTY sure I'm ok in this respect but would like confirmation as there's so much mis-information flying around and the same questions getting repeated is causing confusion when I revisit the thread every few weeks!

    Many thanks


    (To add to this - my aim all along, like many others, is to transfer my Nutmeg into my Skipton.... Thereby closing the Nutmeg account ; resulting in just the one Lifetime ISA....)
    ...
    My worry comes that somewhere there may be a stipulation against having 2 LISAs opened in the same tax year (classed as "subscribed to" on account of one having £100 in and one having £1 in...) purely from a technicality point-of-view, thus resulting in some annoying admin clause ?
  • eskbanker
    eskbanker Posts: 31,066 Forumite
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    NevvyC wrote: »
    I opened my Nutmeg S&S LISA in May (with the minimum, mandatory £100)
    I have since opened a Skipton CASH LISA (and did so funding with £1 -- as there was no option for £0 on the online application form "£1+" ...)

    I'm assuming this isn't a problem as one is a S&S Lifetime ISA and the other is CASH Lifetime ISA ... PRETTY sure I'm ok in this respect but would like confirmation as there's so much mis-information flying around and the same questions getting repeated is causing confusion when I revisit the thread every few weeks!
    No, it's not OK - you're allowed to pay current year subscriptions into one and only one of each ISA type, where the types are:
    Cash (including HTB)
    S&S
    LISA
    IFISA

    So, you're definitely not allowed to pay into two LISAs in the same tax year! The fact that they're both for small amounts doesn't change this....
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