Lifetime ISAs guide
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The paperwork of all ISA transfers specifies how much of the money was paid in during the current tax year. Everything else will be pre-6th April 2017.Just a quick query to follow this point up.... When the HTB ISA has been transferred to the LISA ; how dos the LISA know / take account of WHEN the individual contributions were made in to the HTB (ie. Pre / post 6th April 2017) in order to calculate/add the 'HTB bonus' to any balance contributed pre April 6th 2017 -- does it carry all this information over automatically or ?0 -
There is no requirement to contribute to a HTB ISA every month. You'll be able to pay any money for the next tax year directly into your LISA.dfbefore30 wrote: »I opened the HTB isa last year and by April 6th I will have saved £3400. My intention is to transfer this money into the first cash lifetime isa that becomes available. At the moment that looks like Skipton building society in June. My question is whether I need to keep paying into the HTB isa between now and June? I'd rather not do this as I want to open a separate isa that doesn't have a monthly limit. However, I don't want to risk losing the bonus I've already accrued if I stop paying into it between April and June. Does anyone know if this is a requirement?0 -
dfbefore30 wrote: »I opened the HTB isa last year and by April 6th I will have saved £3400. My intention is to transfer this money into the first cash lifetime isa that becomes available. At the moment that looks like Skipton building society in June. My question is whether I need to keep paying into the HTB isa between now and June? I'd rather not do this as I want to open a separate isa that doesn't have a monthly limit. However, I don't want to risk losing the bonus I've already accrued if I stop paying into it between April and June. Does anyone know if this is a requirement?
You don't *need* to keep paying into your HTB ISA between now and June, unless your HTB ISA has a minimum monthly amount to qualify for their decent interest rate (most just have monthly maximums at the standard £200pm level, rather than minimums). So you could stop paying in and let the balance just sit there and then transfer it out later having made no 2017/18 contributions to it.
For now you should definitely keep paying your monthly amounts in to the HTB for March and April this year - make sure the April one is in your account on or before 5 April to maximise the amount of pre 2017/18 contributions you have made which will qualify for the 25% bonus).
But you could also start saving elsewhere, like Nationwide's 5% regular saver on up to £500pm which is more than any HTB ISA.
Then you can open a LISA with Skipton in June with a token amount of money, and then at some point before the end of March 2018 make sure you transfer all the 2016/17 HTB into the LISA and also put up to £4000 of direct contributions into it which have for the moment been earning you 5% or whatever in other accounts elsewhere.0 -
But my point is that the UK Government decides what is and isn't subject to age discrimination laws. It is pointless making an argument that the legislation should apply when the Government has made an exemption.
Fair enough. Point taken.
A pension offers a 25% bonus to basic rate taxpayers and non-taxpayers in the form of tax relief. It offers a 67% bonus to higher rate taxpayers. Those who pay into a pension are also protected if they need to claim means tested state benefits in the future because pensions cannot be counted in means testing, whereas money in a LISA must be withdrawn (with a penalty) and spent first. Furthermore, those in employment who are able to save into their pension by salary sacrifice can enjoy bonuses of 47% and 72% as a basic rate or higher rate taxpayer respectively. They could get even more if their employer shares some of the savings they enjoy in employer NI contributions.
I guess this is something I’m going to have to look into in more detail. The reason I’ve always put it off is because I figured the priority was to get a house. After all, I’m paying nearly £900/month in rent (and with my partner and two kids, I’d struggle to find a house to rent much cheaper). Although I’ve got a decent amount of savings, because of my health this £900/month is a very substantial proportion of my net earnings. Just like Martin is always saying you should pay off debts before sticking money in a savings account, it feels like I need to be rid of this £900/month ‘can’t-afford-a-property-of-your own tax’ before anything else.
I do agree with you on your other comments in relation to the housing market. In my view, the fairest thing to do intergenerationally would have been to let the housing market find its own level (i.e. a significant crash in property prices), rather then endlessly throwing taxpayer money at people to buy property at ridiculous prices. At some point there will be a mean reversion and those holding property at the time will be the losers. It may well be the same people who will "benefit" from being able to access the LISA.
I do hope so. I remember Cameron saying that people our age would benefit in the end because we’d inherit our parents’ houses. That’s fine if you’re in the Eton set and your parents waited until they were in their 40s to have kids because they were concentrating on high-flying careers, but my parents were in their very early 20s when they had me.
Put it this way: If Brexit doesn’t bring about some change, I’m moving abroad. When I consider what I’ll have to pay over a lifetime here to get a house and some relative security, versus what I’ll get in return for my taxes (the state of the NHS, the cost of sending two children to uni, and even the size of house one gets for one’s money), it just doesn’t seem like a reasonable price. Besides which, I’m not confident the country is going to fare well. What do we have? A financial hub in London, which we might lose to Paris or Frankfurt. Services, which can be provided more cheaply in India. Manufacturing? The cost of raw materials is going to rocket due to sterling’s fall, and there’s plenty of competition from China in terms of easy-to-replicate products. High-tech that the Chinese can’t compete with? Not really. We should have been investing in proper technical education 20 years ago. Countries like Germany will fare much better in this regard. Viewed solely as a matter of ‘will I get my money’s worth?’, the answer seems to be a flat ‘no’.0 -
dfbefore30 wrote: »Apologies if this has been covered elsewhere. I just have a quick question about what to do with my help to buy isa bt April 6th.
I opened the HTB isa last year and by April 6th I will have saved £3400. My intention is to transfer this money into the first cash lifetime isa that becomes available. At the moment that looks like Skipton building society in June. My question is whether I need to keep paying into the HTB isa between now and June? I'd rather not do this as I want to open a separate isa that doesn't have a monthly limit. However, I don't want to risk losing the bonus I've already accrued if I stop paying into it between April and June. Does anyone know if this is a requirement?
Similarly, with this individual's £3400 saved up by 06.04.17 -- when transferring to the Skipton cash Lifetime ISA in June ; how will the LISA KNOW that they are due the 25% bonus on this HTB sum of 3400 (saved up by April 6th) as well as the 25% on any LISA contributions made up to 4K ..,?
(Because surely the HTB ISA will be with a different institution - how does the LISA know to recognise WHEN contributions were made and ergo, how much bonus to add for valid (pre-06.04.17) HTB contributions under the additional generosity of the LISA honouring said valid sums)
Basically will the LISA have record / take account of this immediately or whenever the sum is transferred from HTB ; WHEN will it physically be realised as well as HOW will it be recognised (and honoured...) guessing at end of the 1st year of the LISA still ?
Any help much & solid evidence much appreciated ...!0 -
Similarly, with this individual's £3400 saved up by 06.04.17 -- when transferring to the Skipton cash Lifetime ISA in June ; how will the LISA KNOW that they are due the 25% bonus on this HTB sum of 3400 (saved up by April 6th) as well as the 25% on any LISA contributions made up to 4K ..,?
(Because surely the HTB ISA will be with a different institution - how does the LISA know to recognise WHEN contributions were made and ergo, how much bonus to add for valid (pre-06.04.17) HTB contributions under the additional generosity of the LISA honouring said valid sums)
Basically will the LISA have record / take account of this immediately or whenever the sum is transferred from HTB ; WHEN will it physically be realised as well as HOW will it be recognised (and honoured...) guessing at end of the 1st year of the LISA still ?
Any help much & solid evidence much appreciated ...!
Everything put into the LISA gets 25% added on top (like pensions do for basic rate taxpayers). The first time this bonus will be added is in April 2018 after which it will be added every month following that on contributions made in the previous bonus period.
The LISA provider will know not to reduce the £4,000 LISA allowance by the value of any pre-17/18 subscriptions (plus accrued interest) as the H2B ISA provider will tell them on the transfer form.0 -
bowlhead99 wrote: »You don't *need* to keep paying into your HTB ISA between now and June, unless your HTB ISA has a minimum monthly amount to qualify for their decent interest rate (most just have monthly maximums at the standard £200pm level, rather than minimums). So you could stop paying in and let the balance just sit there and then transfer it out later having made no 2017/18 contributions to it.
For now you should definitely keep paying your monthly amounts in to the HTB for March and April this year - make sure the April one is in your account on or before 5 April to maximise the amount of pre 2017/18 contributions you have made which will qualify for the 25% bonus).
But you could also start saving elsewhere, like Nationwide's 5% regular saver on up to £500pm which is more than any HTB ISA.
Then you can open a LISA with Skipton in June with a token amount of money, and then at some point before the end of March 2018 make sure you transfer all the 2016/17 HTB into the LISA and also put up to £4000 of direct contributions into it which have for the moment been earning you 5% or whatever in other accounts elsewhere.
This is my exact (current) strategy...
Though I'm trying to weigh up whether a HTB at 2.27% interest with 1200; 1400; 1600 in it beats a regular saver at 5% going up in monthly increments of 500 (500; 1000; 1500) hard to say...
And the former is a lot easier to achieve (200pcm v 500pcm) if you cannot afford to do both or maximise with the 500pcm ...
Both have instant access to your money. Both variable rates. The regular saver is a 12month fixed contract as well0 -
The LISA provider will know not to reduce the £4,000 LISA allowance by the value of any pre-17/18 subscriptions (plus accrued interest) as the H2B ISA provider will tell them on the transfer form.
Yes, Masonic had already given the same poster the answer in post #292 before they asked again.
The standard transfer history documentation that accompanies the cash movement from one sending ISA manager to another receiving ISA manager confirms how much current year subscription has been made.
If the answer is that no 'current year' (2017/8) subscription has been made, then the receiving manager knows you have £4000 of contributions you could make direct to the LISA. If the document shows that £1000 of current year (2017/8) contributions are included within the total transfer value, the receiving LISA manager knows you can only make £3000 more direct to him.solid evidence much appreciated
The "solid evidence" for this is enshrined in the ISA regulations that allow ISAs and LISA's to exist.
You can get the 300 page "guidance for ISA managers" from the gov.uk website which talks about how all ISA transfers include history documentation. For specifics on how the bonus claims and reporting process works for LISAs you can take a look at this week's new ISA regulation update which modifies the old rules to include LISA functionality - I linked this on an earlier post in this thread after Ed kindly posted it on its own thread yesterday.
You could also read the government's "design of the lifetime ISA" technical note from last September which was before the last round of consultation but covers all the major points in quite a readable way, although last week's detailed regulations will spell out the legal details more explicitly and are bang up to date.0 -
Clearly you should put at least the £200pm into the HTB for March and early April 2017 because that £400 total gives you a 25%[£100] government freebie after later transfer to the LISA, which you would not otherwise get (for 2016/17 HTB contribution limits, it is use it, or lose it). You could not get as much as £100+ profit on £400 savings in the period of just over a year until they pay the bonus, any other way.This is my exact (current) strategy...
Though I'm trying to weigh up whether a HTB at 2.27% interest with 1200; 1400; 1600 in it beats a regular saver at 5% going up in monthly increments of 500 (500; 1000; 1500) hard to say...
And the former is a lot easier to achieve (200pcm v 500pcm) if you cannot afford to do both or maximise with the 500pcm ...
Both have instant access to your money. Both variable rates. The regular saver is a 12month fixed contract as well
Put as much other spare money as you have in March and April 2017 into that nationwide regular saver within their £500pm limit because 5% is the best rate in town.
In April and beyond there is no point using the HTB ISA at 2% if there is another account to use first such as Nationwide paying 5%. You might as well use the Nationwide for the first £500pm, and only if there's truly spare money at the end of each month which you don't want to keep handy to max out the Nationwide capacity in a short timeframe, put that excess bit in the HTB (or direct to LISA if decent rate).
Although you mention nationwide is a fixed 12m contract, the rate it pays isn't guaranteed to be fixed fit the whole period (but you could imagine it staying well above 2%). And if you want to get the money out before 12m is up, you can get it back same day if you want, to stuff into the LISA (e.g.next march 2018 if you need it to max your LISA contribution for 17/18).0 -
I assume you are in your 40s and have been saving for a house deposit for some years, yet you don't have enough saved up yet for a 10% deposit. I'm not really familiar with the property market in Edinburgh, but a quick look on Rightmove suggests you can get a nice 3 bedroom house for under £250k. So you would be saving about £25k? Even over a short period like 5 years, £25k is only £4k per year with the Government bonus and a couple could save into two HTB ISAs. A LISA therefore wouldn't really help you out on the property side of things, and as discussed above, it probably isn't the best option for you on the pensions side either.I guess this is something I’m going to have to look into in more detail. The reason I’ve always put it off is because I figured the priority was to get a house. After all, I’m paying nearly £900/month in rent (and with my partner and two kids, I’d struggle to find a house to rent much cheaper). Although I’ve got a decent amount of savings, because of my health this £900/month is a very substantial proportion of my net earnings. Just like Martin is always saying you should pay off debts before sticking money in a savings account, it feels like I need to be rid of this £900/month ‘can’t-afford-a-property-of-your own tax’ before anything else.
There are a couple of things that would concern me about this. The first is that if you have been saving for a house deposit for most of your working life so far, and you've not yet been able to afford 10% of a property, then how much of your resultant 90% mortgage would you be able to pay off during the rest of your working life? Not much, if I am understanding your financial situation correctly. The second issue is around your mention of health issues that limit your ability to grow your earnings.
While you might avoid the "£900/month ‘can’t-afford-a-property-of-your own tax’" by ceasing to rent from a private landlord and instead rent your property from the bank, that doesn't leave you much better off financially if you can't pay down your mortgage, and even less so if inflation starts to bite and interest rates make your mortgage interest even more eye-watering than your rent was.
Meanwhile, if you've not been able to save anything for retirement and will be relying solely on the state pension and other benefits, while carrying a hefty mortgage into retirement, then I'd question whether this is a realistic plan. Clearly you would need to do your own calculations using your actual circumstances rather than my guesses, but it does seem like your plan needs some further thought.
It seems pretty obvious that if house prices inflate, people who are owner occupiers still have a home worth '1 property' and the only way to make any financial gain is to downsize to a smaller property. It's the same story for those who are lucky enough to inherit a property, or a share in a property, which they use to fund their own move onto/up the property ladder. The winners are those who have multiple properties and the losers are those who have to buy a property from their wages.I do hope so. I remember Cameron saying that people our age would benefit in the end because we’d inherit our parents’ houses. That’s fine if you’re in the Eton set and your parents waited until they were in their 40s to have kids because they were concentrating on high-flying careers, but my parents were in their very early 20s when they had me.
Unfortunately most people paying into the tax system will receive a lot less than they pay in. That's the fundamental nature of the beast.Put it this way: If Brexit doesn’t bring about some change, I’m moving abroad. When I consider what I’ll have to pay over a lifetime here to get a house and some relative security, versus what I’ll get in return for my taxes (the state of the NHS, the cost of sending two children to uni, and even the size of house one gets for one’s money), it just doesn’t seem like a reasonable price. Besides which, I’m not confident the country is going to fare well. What do we have? A financial hub in London, which we might lose to Paris or Frankfurt. Services, which can be provided more cheaply in India. Manufacturing? The cost of raw materials is going to rocket due to sterling’s fall, and there’s plenty of competition from China in terms of easy-to-replicate products. High-tech that the Chinese can’t compete with? Not really. We should have been investing in proper technical education 20 years ago. Countries like Germany will fare much better in this regard. Viewed solely as a matter of ‘will I get my money’s worth?’, the answer seems to be a flat ‘no’.0
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