Lifetime ISAs guide
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Hi all,
A question on holding a Help To Buy ISA and a LISA at the same time. Apologies if this has already been covered somewhere...
I already have a Help To Buy ISA with a bank. I'm aware that I can hold both a HTB ISA and LISA, but that there might be some restrictions to the amounts held in total (I'm also aware that a the government bonus can only be claimed on one of them).
In this tax year, I've already paid 3 x £200 in to my HTB ISA, so does this amount get deducted from the cap on the LISA? Therefore meaning I could pay a maximum of £3,400 in to a LISA before the next tax year?
Also, assuming I transfer a portion of the HTB ISA in to a LISA, then add some other funds to make up the permitted £4,000 per year in the LISA, what happens to the remainder of the HTB ISA? Can I leave the remaining funds there to collect interest, or so I have to close the HTB ISA and do something else with the money that's in it?
Thanks for your help.0 -
2017/18 HTB contributions are only counted against your LISA allowance if you transfer them into the LISA, so in theory you could pay £2,400 into HTB and £4K into LISA this tax year if you choose not to consolidate.
However, as you know, you can only receive the 25% bonus on one, so the usual recommendation is to transfer your entire HTB into a LISA (as prior year HTB contributions are over and above the £4K LISA cap), towards the end of this tax year, opening a LISA as early as possible to start the 12-month clock ticking. This makes best use of pre 17/18 HTB contributions although I'm not aware of any reason you couldn't leave them there.
When would you be looking to buy?0 -
Looking to buy towards the end of 2018 / early 2019.
So if my understanding is correct:
My HTB contribution in the 16/17 tax year was 2.4k. I could transfer all of this in to a LISA, plus an additional 4k for 17/18 tax year, and then receive the LISA bonus on the whole lot, so 1.6k bonus.
I could then leave the 17/18 HTB contributions (2 x 200) where they are, continue contribution 200 / month to take advantage of the okay interest rate.
Then when it comes to buying a place, use the LISA, and then have the HTB account as a cash pot with no bonus attached.
Have I got that right?
EDIT: Or, would I able to transfer in 4k from the HTB for the 16/17 year, then add another 4k for this year?0 -
Looking to buy towards the end of 2018 / early 2019.
So if my understanding is correct:
My HTB contribution in the 16/17 tax year was 2.4k. I could transfer all of this in to a LISA, plus an additional 4k for 17/18 tax year, and then receive the LISA bonus on the whole lot, so 1.6k bonus.
I could then leave the 17/18 HTB contributions (2 x 200) where they are, continue contribution 200 / month to take advantage of the okay interest rate.
Then when it comes to buying a place, use the LISA, and then have the HTB account as a cash pot with no bonus attached.
Have I got that right?
EDIT: Or, would I able to transfer in 4k from the HTB for the 16/17 year, then add another 4k for this year?
Yes.
Answer to the last question is no because you only paid 2.4k into the H2B ISA in 16/17.0 -
Hi all, I'm considering getting a Lifetime ISA (when a decent cash one becomes available). However, I already own a home so I would only be using it towards retirement.
I've already taken up my employer's matching pension scheme, but is this the scheme that Martin is comparing against or is he talking about any generic pension scheme that I can take personally outside of my employer? If I have money I'd like to save, and I'm already saving into my employer's pension scheme, should I put any other money into a LISA next before an external pension scheme or should I put it into the external pension scheme first? Thanks in advance.0 -
Hi. I have a serious question and little time. My son will be 40 in June and has been thinking about a LISA. He would prefer to go for a cash LISA but according to Martin etc there is only one on offer (with Skipton) and they cannot guarantee that their product will launch before his birthday. That just leaves him with the option of a stocks and shares LISA to get on the bandwagon now (which of course allows him to transfer to a cash LISA at a later date). Accordingly he has spoken to Hargreaves Lansdown and discussed his situation and preferences, on several occasions. He has come away with the impression that HL would allow him to hold some, or even all of his money in cash and that this would still constitute a proper Lifetime ISA. I am baffled as I thought the only cash lifetime ISA was the Skipton one. Can anyone help as we need to know very quickly. Thanks0
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HL are right - cash can be held in any S&S ISA (including S&S LISAs) but would only earn negligible (if any) interest and so will typically only be held this way temporarily (e.g. while waiting to invest) or in small amounts (e.g. to cover charges).
It's still a S&S ISA rather than a cash one so Skipton will still be the first to market with a genuine cash LISA offering proper interest on the deposits, but for the purposes of getting the ball rolling with a deadline looming then yes, opening a HL LISA and paying in some cash without actually investing it does keep his options open, so probably worth doing....0 -
HL are right - cash can be held in any S&S ISA (including S&S LISAs) but would only earn negligible (if any) interest and so will typically only be held this way temporarily (e.g. while waiting to invest) or in small amounts (e.g. to cover charges).
It's still a S&S ISA rather than a cash one so Skipton will still be the first to market with a genuine cash LISA offering proper interest on the deposits, but for the purposes of getting the ball rolling with a deadline looming then yes, opening a HL LISA and paying in some cash without actually investing it does keep his options open, so probably worth doing....
Looks likely to cost him £50:cool:
http://www.hl.co.uk/investment-services/lifetime-isa/charges0 -
I make it £55 actually (the £25 closure fee attracts VAT)!
Two other S&S LISA providers are available, as per http://www.moneysavingexpert.com/savings/lifetime-ISAs#bestbuysstocks - it's not clear to me how long cash can remain uninvested with Nutmeg (so platform fees may apply) and ShareCentre also has a (smaller) exit fee of £25.
So, it doesn't look like there's a no-cost option (that would be guaranteed to be available before the punter's 40th birthday) but the above fees would pale into insignificance when measured against the £10K of bonus available....0
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