Transfer from HTB ISA to LISA

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jen_79
jen_79 Posts: 55 Forumite
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in ISAs & tax-free savings
If someone could give me a quick sanity check on the following, I'd appreciate it.

I have:
  • A Nationwide H2B ISA (2.00% gross interest)
  • A Nationwide Flexclusive ISA (0.75% gross interest)
  • A Skipton LISA (0.50% gross interest)

with Nationwide allowing me to effectively have 2x Cash ISA's under the one allowance. I've made no contributions to the Flexclusive ISA this tax year.

I plan to transfer all the H2B ISA funds to the LISA but not close the H2B ISA, instead I'll close the Flexclusive ISA, thereby ending up with a H2B ISA and a LISA. I can then save up to £4,000 in the LISA for 2017/18.

I'm aware I can't get the government bonus on both a H2B ISA and the LISA but the H2B ISA gives me a better interest rate, so I'd like to keep using it as my Cash ISA.

I've checked the rules and this seems to be OK because the H2B ISA and LISA are different classes of ISA but any advice would be welcome before I make a heinous mistake!

P.S. How many times have I said ISA?!

Comments

  • eskbanker
    eskbanker Posts: 31,034 Forumite
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    jen_79 wrote: »
    I'm aware I can't get the government bonus on both a H2B ISA and the LISA but the H2B ISA gives me a better interest rate, so I'd like to keep using it as my Cash ISA.
    This makes sense provided that you're putting the full £4K into the LISA each year, otherwise it's better to get all your money into the LISA as the 25% bonus outweighs the interest differential unless you're saving for many years!

    And just to be clear, 2017/18 HTB contributions do count towards the 2017/18 £4K LISA allowance when transferred, but HTB contributions from prior years can be transferred without affecting the LISA allowance, as long as you do so before the end of the tax year.
  • jen_79
    jen_79 Posts: 55 Forumite
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    Great, thanks. Yes planning to make the move in December when my interest gets paid, currently saving £200pm into the HTB ISA so having the LISA will be more flexible since I can put it in whatever amount I want whenever I want in 2018/19, up to the £4K cap.
  • Plus
    Plus Posts: 433 Forumite
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    As a followup to this scenario, is it possible to do the following?

    1. Pay in £4000 into LISA during 2017/18 (in jen_79's case, money from her existing cash ISA, or could be new non-ISA money)
    2. Transfer to LISA just the HTB ISA balance at 5 April 2017 (ie no 2017/18 contributions)
    3. Keep 2017/18 deposits in HTB ISA as cash ISA contribution for 2017/18

    In other words, will providers (sending and receiving) be able to transfer just 2015/16 and 2016/17 contributions, leaving 17/18 contributions in the HTB ISA?

    I had a look around for transfer forms, and Skipton's seems to allow this and HL's is vague. HL seem to suggest that the first transfer is always the previous year's money, and you have to do a second transfer for 17/18 money. I can see this going wrong and HTB ISAs getting inadvertently closed...
  • jen_79
    jen_79 Posts: 55 Forumite
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    I went back and read the T&C's of my Nationwide ISA and it complicates matters:
    If you transfer all of the money to another ISA which is not a Help to Buy: ISA, (either with us or with another provider), we will treat this as your request to close the account and will send you the closing documents.

    If I don't transfer the full amount I might be able to keep my H2B ISA open which I think is what you are suggesting but I don't know if I could transfer say £4999 of £5000 or if they would catch on.

    I think I might just transfer all to the LISA and maintain a normal Cash ISA.
  • Plus
    Plus Posts: 433 Forumite
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    My thought was that this is a good story to explain to providers that they shouldn't close your HTB ISA: "I'm sorry, but I've already maxed out my LISA for this year. So you can only transfer past years HTB contributions for me"

    The Nationwide multi-ISA thing confuses matters. If you aren't going to use all your allowance I'd be tempted to withdraw your Flexclusive money and pay it into the LISA, making it new LISA money. Then everyone knows what's HTB money and what isn't.

    I can't see that T&C coming into play unless you drain the account - it probably just means they don't want to maintain accounts with £0 in them.
  • k0zmic
    k0zmic Posts: 21 Forumite
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    Looking to transfer my Halifax HTB into my HL LISA - but as suggested in this thread - I only want to do 16/17 contributions into the LISA and leave the 17/18 contributions in the HTB (as I have already contributed the max / near max to the LISA)

    Has anyone here done the above? Can HL do only the 16/17 portion and leave the HTB open?

    Thanks
  • Alexland
    Alexland Posts: 9,653 Forumite
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    It should be possible within the rules have you asked them if they support this? I would check their transfer form but they want lots of personal details before they let you download it.
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