First-time buyers trick: Max LISA and Help to Buy ISA gains by timing it right
Options
Comments
-
Surely rule 3 and 4 breaks the rule 'that you can't pay into more than ISA in a tax year? I'm confused.
I thought that as soon as you put anything in the Lifetime ISA (£1,£1,600,anything) when you open it on 6th April 2017 then you can only pay into the Lifetime from then on and not the Help to Buy as it would mean you have paid into two different ISA's in tax year 2017/2018?0 -
Surely rule 3 and 4 breaks the rule 'that you can't pay into more than ISA in a tax year? I'm confused.
I thought that as soon as you put anything in the Lifetime ISA (£1,£1,600,anything) when you open it on 6th April 2017 then you can only pay into the Lifetime from then on and not the Help to Buy as it would mean you have paid into two different ISA's in tax year 2017/2018?
You CAN pay into 2 different ISAs in a tax year as long as they are different types.
As I've posted multiple times on here, there are 4 different types of ISA from April:- Cash ISA (eg. Help to Buy ISA)
- Stocks and shares ISA
- Innovative finance ISA
- Lifetime ISA
You can pay into all 4 types if you want but only one of each type and within the overall £20,000 ISA allowance from April, and within the specific account limits (eg. Help to Buy ISA has a £200 per month limit; Lifetime ISA has a £4,000 per year limit).0 -
Thanks Ed-1. I thought Lifetime ISA was a cash ISA. Been bugging me for a while.
It says on the gov website;
'You can transfer the balance in your Help to Buy ISA into your Lifetime ISA at any time if the amount is not more than £4,000.
In the tax year 2017 to 2018 only, you can transfer the total balance of your Help to Buy ISA, as it stands on 5 April 2017, into your Lifetime ISA without affecting the £4,000 limit.'
On 2nd April 2017 I will have £4,088.31 in Help to Buy (this includes interest).
Can you answer these questions?
1) . Should I stop the last payment or reduce it to stop it going over £4,000 (consequently the £88.31 is interest and not what I paid into the Help to Buy) and transfer in to a Lifetime ISA when I open one on 6th April.
2) It says 'you can transfer the total balance of your Help to Buy ISA, as it stands on 5 April 2017, into your Lifetime ISA' above but I thought you can only open a Lifetime ISA on 6TH APRIL 2017 or later?
3) What would the best scenario for me to maximise gains?
Sorry to ask but it's confusing. TIA.0 -
Thanks Ed-1. I thought Lifetime ISA was a cash ISA. Been bugging me for a while.
It says on the gov website;
'You can transfer the balance in your Help to Buy ISA into your Lifetime ISA at any time if the amount is not more than £4,000.
In the tax year 2017 to 2018 only, you can transfer the total balance of your Help to Buy ISA, as it stands on 5 April 2017, into your Lifetime ISA without affecting the £4,000 limit.'
On 2nd April 2017 I will have £4,088.31 in Help to Buy (this includes interest).
Can you answer these questions?
1) . Should I stop the last payment or reduce it to stop it going over £4,000 (consequently the £88.31 is interest and not what I paid into the Help to Buy) and transfer in to a Lifetime ISA when I open one on 6th April.
2) It says 'you can transfer the total balance of your Help to Buy ISA, as it stands on 5 April 2017, into your Lifetime ISA' above but I thought you can only open a Lifetime ISA on 6TH APRIL 2017 or later?
3) What would the best scenario for me to maximise gains?
Sorry to ask but it's confusing. TIA.
Answer to (1) is no as you miss off the crucial bit in your quote in (2): transfers from a Help to Buy ISA of funds built up before 6th April 2017 can be made in addition to new contributions into the LISA of £4k (i.e. they don't count against the £4k LISA limit) in tax year 2017/18 only.
The answer to (3) depends on the rate you get on the Help to Buy ISA compared with the LISA. You can keep paying into the Help to Buy ISA and pay £4k into a new LISA alongside it, then in March 2018 transfer pre-2017/18 funds from the Help to Buy ISA into the LISA (keeping the money in the Help to Buy ISA as long as possible before transferring to LISA makes sense if the interest rate is higher than LISA).0 -
Thanks Ed-1. In last paragraph are you saying that so in March 2018 I will have a Help to Buy ISA with funds from monthly payments between 6th April 2017 - 5thApril 2018 and a Lifetime ISA with £4,000 and funds from the Help to Buy between it opened -5th April 2017.
Sorry confused as usual.
I think if you pay into Help to Buy and put £4K into Lifetime at same time then those monthly payments in Help to Buy after 6th April will count towards the £4K of the Lifetime and therefore will get rejected? Ie, £2,400 of the Help to Buy (if full year of £200 monthly between 6th April 2017 - 5th April 2018) counts so can only put £1,600 into Lifetime?
After reading some articles I think the best is this?
1) Keep doing Help to Buy till March 2018.
2) Open Lifetime ISA on 6th April 2017. Can put £1 to get ball rolling since can only use bonus after 1 year?
3) In March 2018 transfer Help to Buy in to Lifetime ISA.
4) In March 2018 deposit £1,600 in to Lifetime ISA.
TIA.0 -
Thanks Ed-1. In last paragraph are you saying that so in March 2018 I will have a Help to Buy ISA with funds from monthly payments between 6th April 2017 - 5thApril 2018 and a Lifetime ISA with £4,000 and funds from the Help to Buy between it opened -5th April 2017.
Sorry confused as usual.
I think if you pay into Help to Buy and put £4K into Lifetime at same time then those monthly payments in Help to Buy after 6th April will count towards the £4K of the Lifetime and therefore will get rejected? Ie, £2,400 of the Help to Buy (if full year of £200 monthly between 6th April 2017 - 5th April 2018) counts so can only put £1,600 into Lifetime?
After reading some articles I think the best is this?
1) Keep doing Help to Buy till March 2018.
2) Open Lifetime ISA on 6th April 2017. Can put £1 to get ball rolling since can only use bonus after 1 year?
3) In March 2018 transfer Help to Buy in to Lifetime ISA.
4) In March 2018 deposit £1,600 in to Lifetime ISA.
TIA.
You don't have to transfer all of the Help to Buy ISA into the LISA. You should be able to tell your LISA provider that you want pre-2017/18 funds only transferred. You can keep £2,400 from 2017/18 in the Help to Buy ISA (purely for a higher interest rate, even though you can't use the bonus anymore) and just use it as a regular savings account at a high interest rate.0 -
Thanks Ed-1. Yeah this seems wisest choice.0
-
Does anyone know if I can use the bonus on the full balance of the LISA to buy a house in, say, 2 years, but then continue to save into the LISA and receive a bonus on my contributions to withdraw when I'm 60 or older?0
-
Galileo_Figaro wrote: »Does anyone know if I can use the bonus on the full balance of the LISA to buy a house in, say, 2 years, but then continue to save into the LISA and receive a bonus on my contributions to withdraw when I'm 60 or older?
The bonus is paid into your account soon after you put money in (like tax relief in a pension). You can choose to withdraw money from it any time you want but 25% will be deducted from the amount you withdraw if you withdraw for a purpose other than first-time house purchase before age 60.
You can use the full balance of the LISA to buy a first house and then keep saving in it afterwards. You can open a new LISA every year if you wanted (as you can with other ISA types like cash ISA).0 -
Hi,
I'm a little confused to Martin's advice (particularly rule number 3).
1) I thought that you could only transfer money that was saved in a HTB before April 2017 to a LISA and it not impact your LISA allowance for the April 2017 - April 2018 year?
2) If you have a LISA and a HTB and you transfer your HTB savings from before April 2017 into the LISA on 6th April 2017, do you still get the full allowances for both savings accounts for that year? For example you can still save £200 per month in HTB in the April 2017 - April 2018 year, plus you can save the full £4000 (plus the money transfered from HTB in previous year) in your LISA in the April 2017 - April 2018 year? This is what I would do. I'm aware that I can only use the 25% bonus on one of the accounts.
Thank you
You understand both correctly. What is your issue with point 1?0
This discussion has been closed.
Categories
- All Categories
- 343.3K Banking & Borrowing
- 250.1K Reduce Debt & Boost Income
- 449.7K Spending & Discounts
- 235.3K Work, Benefits & Business
- 608.1K Mortgages, Homes & Bills
- 173.1K Life & Family
- 248K Travel & Transport
- 1.5M Hobbies & Leisure
- 15.9K Discuss & Feedback
- 15.1K Coronavirus Support Boards