Lifetime ISAs guide

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Comments

  • cullet16
    cullet16 Posts: 2 Newbie
    Two questions:

    1. Does the yearly allowance run 12 months from April or January?

    2. Although there is a £4,000 allowance for the 25% bonus, can you still deposit more and just get basic interest on it?
  • masonic
    masonic Posts: 23,270 Forumite
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    cullet16 wrote: »
    Two questions:

    1. Does the yearly allowance run 12 months from April or January?

    2. Although there is a £4,000 allowance for the 25% bonus, can you still deposit more and just get basic interest on it?
    1. Everything is stated in tax years.

    2. No, but it is unlikely that this would be the best place for excess savings anyway. No LISAs that are currently available pay any interest at all.
  • System
    System Posts: 178,093 Community Admin
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    edited 14 April 2017 at 9:12PM
    eskbanker wrote: »
    Not sure I'm understanding the distinction you're making - use of HTB/LISA funds towards a deposit will inherently reduce the size of the mortgage required by the same amount. Do you have example figures in mind that may help illustrate what you're getting at?


    Basically my folks have offered to help out using a Barclays 'Springboard mortgage' whereby they put a lump sum down as deposit in sense of a "guarantor" ...

    I'm just wondering if I open & use a LISA I'd be able to put these funds (with the 25% bonus) towards the value of the house as their lump sum goes back to them after (x) amount of time... (And it will still be my first property purchase! So just wondering if that falls under the terms essentially)

    Moreover, I'm not 100% sure the Barclays programme will still be running by the time I come to purchase next May as I doubt I'd be able to sort a property in time for end of THIS May ?! And also wouldn't want to open + lock away my £££ unnecessarily in a LISA (whether S&S or cash LISA) and risking penalty ... (If I can help it!)
  • masonic
    masonic Posts: 23,270 Forumite
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    edited 14 April 2017 at 9:22PM
    NevvyC wrote: »
    Basically my folks have offered to help out using a Barclays 'Springboard mortgage' whereby they put a lump sum down as deposit in sense of a "guarantor" ...

    I'm just wondering if I open & use a LISA I'd be able to put these funds (with the 25% bonus) towards the value of the house as their lump sum goes back to them after (x) amount of time... (And it will still be my first property purchase! So just wondering if that falls under the terms essentially)

    Moreover, I'm not 100% sure the Barclays programme will still be running by the time I come to purchase next May as I doubt I'd be able to sort a property in time for end of THIS May ?! And also wouldn't want to open + lock away my £££ unnecessarily in a LISA (whether S&S or cash LISA) and risking penalty ... (If I can help it!)
    Presumably your parents aren't putting down the whole mortgage deposit, so I can't see it being an issue. Even if they were buying jointly with you it wouldn't be a problem. All you need to do is make sure the proceeds from your HTB ISA or LISA are actually included in the funds used at completion and the property is in your name.
  • mb16
    mb16 Posts: 1 Newbie
    Does anyone know if in new tax year April 2018 I deposit the maximum £4,000 into my LISA I would get the £1k bonus straight away or will this be paid across 12 months (i.e £83.33 a month)?


    Thanks
  • masonic
    masonic Posts: 23,270 Forumite
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    mb16 wrote: »
    Does anyone know if in new tax year April 2018 I deposit the maximum £4,000 into my LISA I would get the £1k bonus straight away or will this be paid across 12 months (i.e £83.33 a month)?
    It will be paid in full during May 2018.
  • Ed-1
    Ed-1 Posts: 3,891 Forumite
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    masonic wrote: »
    The regulation states "The first or only transfer from a Help to Buy ISA (as described in regulation 5DDC(6)) to a Lifetime ISA in the year 2017-18 in an amount not exceeding the balance on the Help to Buy ISA as at 5th April 2017 plus accrued interest."

    That could be interpreted as

    Either:
    1) "The first or only transfer from a Help to Buy ISA (as described in regulation 5DDC(6)) to a Lifetime ISA in the year 2017-18 in an amount not exceeding the balance on the Help to Buy ISA as at 5th April 2017 plus accrued interest as at 5th April 2017".

    Or:
    2) "The first or only transfer from a Help to Buy ISA (as described in regulation 5DDC(6)) to a Lifetime ISA in the year 2017-18 in an amount not exceeding the balance on the Help to Buy ISA as at 5th April 2017 plus accrued interest at the point of transfer".

    This response from the Treasury confirms that only interest accrued up to 5th April is not counted as a LISA contribution in 17/18. So (1) above is correct which I assume complicates transfer calculations significantly.

    https://www.whatdotheyknow.com/request/398974/response/966594/attach/2/TO%20TO2017%2008177.pdf
  • masonic
    masonic Posts: 23,270 Forumite
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    Ed-1 wrote: »
    This response from the Treasury confirms that only interest accrued up to 5th April is not counted as a LISA contribution in 17/18. So (1) above is correct which I assume complicates transfer calculations significantly.

    https://www.whatdotheyknow.com/request/398974/response/966594/attach/2/TO%20TO2017%2008177.pdf
    Thanks for sharing this, disappointing as it is. Hopefully there will be some way to make this less arduous. Either by specifying a partial transfer of a specific amount of previous year subscriptions, or by using a flexible ISA to make things right after the transfer value is known.
  • Ed-1
    Ed-1 Posts: 3,891 Forumite
    First Anniversary Name Dropper First Post
    masonic wrote: »
    Thanks for sharing this, disappointing as it is. Hopefully there will be some way to make this less arduous. Either by specifying a partial transfer of a specific amount of previous year subscriptions, or by using a flexible ISA to make things right after the transfer value is known.

    It does seem a but ridiculous to only allow accrued interest up to 5th April. With interest not counting as a subscription for ISAs in general there may well be no way of requesting interest accrued only up to that date to be transferred. It may well be that banks will only allow you to transfer the value of the account as at 5th April and leave the accrued interest where it is simply because they don't have the mechanisms in place to easily separate the accrued interest from before and after 5th April.

    How would you use a flexible ISA?
  • masonic
    masonic Posts: 23,270 Forumite
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    Ed-1 wrote: »
    How would you use a flexible ISA?
    Didn't fully engage the brain with that one - I was conflating the overall subscription limit (which would be unaffected by this) with the LISA limit (which will be affected).
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