Lifetime ISAs guide

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  • Alexland
    Alexland Posts: 9,653 Forumite
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    edited 10 October 2017 at 1:15PM
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    Hi - welcome to the forum

    On what you have said the LISA sounds better for your circumstances saving up to be a first time property buyer in the near future.

    On the LISA if you contribute £4k this tax year then you will not be able to make any additional contributions until the start of the next tax year on 6th April when you can put up to another £4k in. So if you put £4k in now (or later in the tax year) and only £2k in next tax year then yes you will get a £1000 and £500 bonus so a total of £7500. If you have another £2k by then you can get a further £500 bonus to get to £10k.

    With LISAs it doesn't need to be monthly you can do lump sums whenever you want provided you don't exceed the limit in a tax year. The LISA account must be open 12 months before you can use it to buy a house.

    Alex
  • binaryuniverse
    binaryuniverse Posts: 906 Forumite
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    The best return is to put that £6000 in to high interest current accounts (open the LISA with £1 now though). Let that gain as much interest as possible, until the end of March, then dump £4000 in the before the new tax year starts. Then keep the remaining £2000 gaining interest, then stick that in the LISA, when you're ready to buy.
  • Alexland
    Alexland Posts: 9,653 Forumite
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    Just don't leave it too late in the tax year as LISA providers will be busy and there can be delays verifying identify, etc.
  • Neys
    Neys Posts: 1 Newbie
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    Hi everyone,

    I am in a position that I suspect a number of people may be familiar with:

    I opened a H2B ISA as soon as they became available with Halifax and have been plowing the maximum in every month. This pot is now at a handy ~£5k. I also know about the issues accessing the bonus before completion and thus...

    After umming and aahhing a bit earlier this year, I opened a LISA with Nutmeg. This choice was based on their zero transfer out fees and reasonably simple structure. At the time, I asked what the timescale was for H2B transfers and received "before the summer" as a response. That subsequently slid to "before the end of the year" and, yesterday, became:
    "I am afraid it's looking less likely that the ability to have help to buy ISA's transferred into your LISA will be happening within this tax year."

    So, I have a slight predicament: my current LISA provider is (probably) not going to be able to combine the two ISAs and I want to avoid the excruciatingly high fees charged by the other investment LISA providers. Is the Skipton LISA my only choice? Is the 0.5% interest even worth it? Finally, if I transfer my H2B ISA, will I be paid out any interest accrued or do I lose it all?

    Any and all comments and advice would be appreciated.

    Thanks!
  • eskbanker
    eskbanker Posts: 31,066 Forumite
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    Neys wrote: »
    So, I have a slight predicament: my current LISA provider is (probably) not going to be able to combine the two ISAs and I want to avoid the excruciatingly high fees charged by the other investment LISA providers. Is the Skipton LISA my only choice? Is the 0.5% interest even worth it?
    As you've found, there are only a small number of LISA providers so if you're moving from Nutmeg then you need to choose between high fees or low interest. Personally I'd go with the latter, given that your capital is protected in a cash product more suited to relatively short timescales, unless you're looking at 5+ years before buying. You can always transfer it on again if/when a better deal comes up later or Nutmeg get their act together.
    Neys wrote: »
    Finally, if I transfer my H2B ISA, will I be paid out any interest accrued or do I lose it all?
    Interest will be paid on a pro rata basis up to the date of transfer.
  • Hipperty
    Hipperty Posts: 21 Forumite
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    Hi, I plan to transfer in money from my H2B ISA into my Skipton LISA, but want to continue saving afterwards into the H2B ISA due to the better interest rate. Do I have to transfer this years contributions, so far, in full as I will be transferring during the current tax year?
    Thanks in advance for any advice.
  • eskbanker
    eskbanker Posts: 31,066 Forumite
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    Hipperty wrote: »
    Hi, I plan to transfer in money from my H2B ISA into my Skipton LISA, but want to continue saving afterwards into the H2B ISA due to the better interest rate. Do I have to transfer this years contributions, so far, in full as I will be transferring during the current tax year?
    Thanks in advance for any advice.
    Yes, current year contributions need to be transferred in their entirety, as per clause 11.12a of the scheme rules:
    Where current year subscriptions are transferred they must be transferred in whole (including any related income*)

    Just to be sure, you do realise that you can't get/use the 25% bonus on both a LISA and a HTB ISA for a first-time property purchase? As you say, HTB ISA interest is often more generous than other accounts but should only be considered after filling up a LISA with £4K every year if you're not going to get the bonus on it.
  • Young_Investor
    Young_Investor Posts: 13 Forumite
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    Hopefully someone more knowledgeable than me can help.

    I have a Help to Buy ISA which I have contributed to in the 2017/18 tax year. I am aware these 2017/18 contributions count towards the overall £4,000 LISA allowance, once transferred.

    I also set up a Nutmeg LISA in April to start the 12 month ball rolling (staying within the combined £4,000 allowance).

    However, is it possible for me to transfer my H2B ISA to the Skipton Cash LISA, while also having contributed to the Nutmeg S&S LISA?

    Do my 2017/18 H2B ISA contributions count as 2017/18 LISA contributions once my H2B ISA has been transferred into a LISA and therefore mean I have 'contributed to more than once LISA in the same tax year' as per the rules i.e. Skipton LISA (via H2B ISA contributions and Nutmeg LISA?

    Or is my only option to transfer my H2B ISA to Nutmeg, once they finally allow you to do this?

    Many thanks to any once whom can answer my questions.
    Current Savings - £4,537 / £10,000 - Dec '14 Target Savings :beer:

    "Give me a one-handed economist! All my economists say, 'on the one hand on the other..'" Harry. S. Truman
  • Alexland
    Alexland Posts: 9,653 Forumite
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    edited 16 October 2017 at 12:46PM
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    Hi

    Apologies for the delay in someone answering.

    You can only have one LISA each tax year but you can move it between providers and types and continue to contribute with the new provider until you reach the the annual limit.

    So you can transfer the Nutmeg to Skipton then transfer the HTB into Skipton and make up any remaining contribution up to the £4k limit (the combined total of the Nutmeg & Skipton LISA and the 17/18 HTB contributions)

    Alex
  • rachlikeswinter
    rachlikeswinter Posts: 217 Forumite
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    Hi everyone.

    I think I’ve wrapped my head around the HTB vs LISA case and the ins and outs of transferring etc, I just have a couple of questions to do with my situation that I’d like some advice on if poss.

    1) I opened my HTB with Halifax on 6th April 2016. So I know that all my contributions from then until 5th April 2017 will go into LISA but won’t count against £4k limit. However – I received my interest for that year (around £80 if I remember) on the 6th April; will that count for this year’s 4k allowance or for the previous ‘extra allowance’? I guess what I’m saying is, this year 17/18 can I contribute £4000, or only £3920?

    2) I’m yet to open my Skipton LISA but will be doing in the next month or so in preparation. I know that transferring from Halifax to Skipton should be done in March-ish (in case of delays but to maximise Halifax’s 3.5% interest), but a) do we know/have we heard any rumblings they will stop transfers before then and b) can I do all this online, is it fairly simple? My issue being I will be living in France from Dec-May so I don’t want Skipton to suddenly need me to bring ID or something into a branch.. Should I just transfer earlier for peace of mind but lose out on my Halifax interest?

    3) Once I’ve transferred my Halifax to Skipton, am I correct in thinking my Halifax one will remain open (albeit empty) so I can keep putting money into it? I know you can’t get bonus on both, but I was planning to keep feeding my Halifax every year with the 3.5% and then put the £2,400 + interest into my Lisa before end of every tax year, topping up with money from a high interest regular saver. Does that make sense/is that possible?

    Sorry, bit wordy. TIA :)
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