HTB ISA to LISA - should I have done it already?

cashvoid121
cashvoid121 Posts: 87 Forumite
in Savings & investments
I have an HTB ISA in Barclays which was opened with the maximum amount about a year ago, and was topped up with the maximum £200 per month ever since. It probably has about £3600 from me in it.

I've decided I want to open a LISA (prospective 1st time home buyer) with Skipton. Reading around, I'm starting to get an inkling that there was a particular strategy I should have pursued to get the maximum benefit from both accounts. Can somebody explain to me what this is, and have I missed the deadline?

Thanks for any replies.
«134

Comments

  • cashvoid121
    cashvoid121 Posts: 87 Forumite
    I'm reading about this AJ Bell work around, since their (non-guaranteed) deadline is 19th March. My questions then are:

    1) Will my money then be invested in stocks/shares, with the risks that entails?

    2) Is it a straightforward procedure to transfer to Skipton after I've earned my 2017-18 bonus?
  • Curos
    Curos Posts: 28 Forumite
    First Anniversary First Post
    Hi Dave

    I think you're probably referring to point 7 of the following link: https://www.moneysavingexpert.com/savings/lifetime-ISAs

    It's really only regarding contributions in previous tax years (i.e. before the 17/18 tax year), so if you've only contributed this tax year I'm not aware of any particular 'strategy'.

    In any case, even if you had made contributions in previous tax years you have missed the Skipton transfer deadline of 1 March 2018 (there is a possible workaround detailed in the link and in other threads on this forum).

    You can still pay in to your LISA up to the maximum £4k allowance for this year from your HTB ISA (or any other account of your choosing).

    You may wish to keep some money in the HTB ISA to keep it open if it has a decent interest rate as a form of regular saver, but you won't be able to get the bonus from both the HTB ISA and LISA when buying a house.
  • eskbanker
    eskbanker Posts: 30,929 Forumite
    First Anniversary Name Dropper Photogenic First Post
    Although you've missed the deadline for transferring directly from HTB to Skipton LISA, there's nothing to stop you opening the LISA, closing the HTB, withdrawing the £3600 to your bank account and then paying it into the LISA (assuming you haven't made substantial contributions to other ISAs during 2017/18).

    If you do this all by 5 April, you'll still have another £4K of fresh allowance for the next tax year. You'll receive a £900 government bonus in late April or early May and then 25% of all subsequent contributions, applied about 4-8 weeks after they're made....
  • cashvoid121
    cashvoid121 Posts: 87 Forumite
    If possible I'd like to get the £1400 that was in the HTB ISA by 5th April 2017 into a LISA - but apparently I cannot do this via Skipton before the new tax year. I'm trying to assess the dodginess of the work around that has been suggested, since I've not heard of AJ Bell (for all I know they could just run off with the cash), and I'm also not entirely sure what would be happening with any money put in their Stocks and Shares LISA (i.e. is it automatically invested and therefore at risk).
  • aj23_2
    aj23_2 Posts: 1,155 Forumite
    Name Dropper First Post Combo Breaker First Anniversary
    You've missed Skipton's deadline for transferring in.

    You'd have to close your HTB and open a LISA and deposit the money.
  • eskbanker
    eskbanker Posts: 30,929 Forumite
    First Anniversary Name Dropper Photogenic First Post
    The limit on LISA contributions is £4K per tax year, so you can get £4K into one between now and 5 April and then another £4K in over the following 12 months.

    If you're starting with £3600 in total then there's no need to worry at all about transfers and workarounds, as this is within the 2017/18 LISA limit, but if you have other money available right now then it may be worth pursuing. How much do you have available for saving into a LISA?

    If desired, you can pay money into a S&S (L)ISA without actually investing it....
  • cashvoid121
    cashvoid121 Posts: 87 Forumite
    edited 9 March 2018 at 7:07PM
    eskbanker wrote: »

    If desired, you can pay money into a S&S (L)ISA without actually investing it....


    This is the part I'm wondering about. I do have more than £3600 to invest, but I don't really want to put it at risk in stocks and shares. So with one of these S&S LISAs, is the money not automatically invested in some stock/share programme? Or does it just sit there on your account waiting to be invested by you?

    Out of curiosity, how is the value of an S&S LISA calculated for the purposes of the government bonus (if the money is invested in stocks and shares)?

    Also, are we 100% certain that you can transfer an S&S LISA into a cash LISA without any penalty?
  • Alexland
    Alexland Posts: 9,653 Forumite
    First Anniversary Photogenic Name Dropper First Post
    edited 9 March 2018 at 7:14PM
    Dangerous_Dave2k wrote: »
    This is the part I'm wondering about. I do have more than £3600 to invest, but I don't really want to put it at risk in stocks and shares. So with one of these S&S LISAs, is the money not automatically invested in some stock/share programme? Or does it just sit there on your account waiting to be invested by you?

    Depends on your LISA provider - with a DIY platform such as HL or AJ Bell they will not invest it automatically - but Nutmeg would (who don't accept HTB transfers), etc.
    Dangerous_Dave2k wrote: »
    Out of curiosity, how is the value of an S&S LISA calculated for the purposes of the government bonus (if the money is invested in stocks and shares)?

    It's based on your contribution - the money you add to the account which is a historical fact and doesn't change with the ups and downs of the investment performance.
    Dangerous_Dave2k wrote: »
    Also, are we 100% certain that you can transfer an S&S LISA into a cash LISA without any penalty?

    Again depends on your LISA provider as some such as HL have exit/transfer fees. AJ Bell does not charge for cash transfers - only if you are trying to transfer investments.

    "Cash transfer to another Lifetime ISA manager - No charge"

    https://www.youinvest.co.uk/lifetime-isa/charges-and-rates
  • cashvoid121
    cashvoid121 Posts: 87 Forumite
    Alexland wrote: »
    Again depends on your LISA provider as some such as HL have exit/transfer fees. AJ Bell does not charge for cash transfers - only if you are trying to transfer investments.

    "Cash transfer to another Lifetime ISA manager - No charge"

    https://www.youinvest.co.uk/lifetime-isa/charges-and-rates

    And the government would not have an issue with it being two different types of LISA? (i.e. there is no issue with transferring an S&S LISA into a cash LISA?)

    So the procedure would be to transfer my April 5th 2017 balance from my HTB to AJ Bell, add in £4000 of other funds before 06/04/2018, earn the bonus, and then transfer out to Skipton in the new tax year? Can anyone see any stumbling blocks/risks with this?
  • Alexland
    Alexland Posts: 9,653 Forumite
    First Anniversary Photogenic Name Dropper First Post
    Many people on these forums have been doing this recently as only S&S LISAs were available at launch and they really wanted the cash LISA for their short term saving for a property purchase.

    The biggest risk is that the HTB ISA transfer does not complete in time.

    Alex
This discussion has been closed.
★ ★ ★ Meet your Ambassadors

Categories

  • All Categories
  • 343.1K Banking & Borrowing
  • 250.1K Reduce Debt & Boost Income
  • 449.7K Spending & Discounts
  • 235.2K Work, Benefits & Business
  • 607.9K Mortgages, Homes & Bills
  • 173K Life & Family
  • 247.8K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.9K Discuss & Feedback
  • 15.1K Coronavirus Support Boards