Lifetime ISAs guide
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Hi all,
So i have recently (this week) taken out a cash LISA with Skipton with plans to save for and buy a house in 3 - 4 years time.
Now, my plan is to contribute £4,000 only each tax year to gain the £1000 bonus. I have more money to save and plan to the rest into a regular savings account which has a higher interest rate.
In this scenario i'm not sure which would be more efficient -
1) front load the £4000 into the LISA as quick as possible and then start contributing to the regular saver (repeat each tax year).
2) split the £4000 across the tax year (£333.33 / month, off the top off my head), and contribute the rest to the regular saver from day1.
Side note - if i manage to get £4000 into my LISA between now and April (unlikely), would i get the £1000 bonus for this tax year?
Thanks in advance for any help
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Hi guys, quick question:
I opened a nutmeg Lisa, planning to transfer my htb ISA into it. Of course, they let us down so I ended up transferring over to Skipton (completed) and am in the process of transferring the htb over, should be completed in next couple of days.
I am slightly worried I've done things the wrong way round for the Lisa allowance.
I've made no htb contributions this tax year. I initially started the nutmeg account with £600. This is now transferred into Skipton. Am I going to be allowed to top up the remaining £3400 allowance into Skipton?
Asking because I've now seen you're only allowed to contribute to one Lisa per year.
Is this true even if you've transferred and closed the original account?
Thanks!0 -
In this scenario i'm not sure which would be more efficient -
1) front load the £4000 into the LISA as quick as possible and then start contributing to the regular saver (repeat each tax year).
2) split the £4000 across the tax year (£333.33 / month, off the top off my head), and contribute the rest to the regular saver from day1.
If you can earn better interest elsewhere then it would make sense to make the LISA contribution towards the end of each tax year. But not so late that any delay in processing the transaction would risk the bonus for the year. Your situation is simpler than others as you are contributing cash not trying to transfer an existing HTB ISA etc.Side note - if i manage to get £4000 into my LISA between now and April (unlikely), would i get the £1000 bonus for this tax year?
Yes if you get the money in by 5th April you would get the full 25% bonus added in April or May.
Are you sure there is no financial engineering you can do to enable this? If you definitely have more income than you will be allowed to contribute in future years would it be worth using a short term loan, defer normal spending using an interest free credit card, etc. Obviously only borrow what you can clearly afford to repay as I wouldn't suggest taking risks or paying high interest to fill your LISA this year. Don't do anything to risk your credit rating for when applying for a mortgage but a responsible quickly repaid loan should be ok.
Alex0 -
Hi guys, quick question:
I opened a nutmeg Lisa, planning to transfer my htb ISA into it. Of course, they let us down so I ended up transferring over to Skipton (completed) and am in the process of transferring the htb over, should be completed in next couple of days.
I am slightly worried I've done things the wrong way round for the Lisa allowance.
I've made no htb contributions this tax year. I initially started the nutmeg account with £600. This is now transferred into Skipton. Am I going to be allowed to top up the remaining £3400 allowance into Skipton?
Asking because I've now seen you're only allowed to contribute to one Lisa per year.
Is this true even if you've transferred and closed the original account?
Thanks!
From an HMRC perspective it's the same LISA you are just changing provider by transfering it. You should be able to use your remaining LISA allowance with your new provider.0 -
Worth double-checking this with Halifax and/or HL as it contravenes the rules laid down by HMRC, under which everything earned (or paid in as new money) in a HTB during 2017/18 counts towards the 2017/18 £4K annual LISA allowance if transferred....3) Interest accrued after 5th April 17 does not contribute towards the 2017/2018 £4,000 LISA allowance.0 -
Worth double-checking this with Halifax and/or HL as it contravenes the rules laid down by HMRC, under which everything earned (or paid in as new money) in a HTB during 2017/18 counts towards the 2017/18 £4K annual LISA allowance if transferred....
Agreed, as I understand this was how the scheme is to be administered. However I am reporting was has been done which I have received the statements to confirm0 -
I know this would have been answered a million times in this thread, but I’m hopeless with this type of stuff so would like it confirming for myself.
I currently have 3000 in a HTB ISA. If I transfer this to Skipton before the cut off date of April, I would be entitled to the 25% additional money?
You can only save 4000 per year, so for the next months I’d only be able to save an extra 1000? Or would the 25% on top when switching affect this?
Would it be worth me transferring this money over or a partial transfer?
I’m sure I’m forgetting something aaagghh!
Thanks for the help0 -
Yes, all legitimate funding of a LISA (such as this) will receive a 25% bonus. Remember that Skipton have a cutoff of 1 March for transfers to be completed this tax year.I currently have 3000 in a HTB ISA. If I transfer this to Skipton before the cut off date of April, I would be entitled to the 25% additional money?
It's £4K per tax year, i.e. £4K between now and 5 April 2018, then another £4K between 6 April 2018 and 5 April 2019 and so on. The bonus doesn't affect this, the limit is on contributions.You can only save 4000 per year, so for the next months I’d only be able to save an extra 1000? Or would the 25% on top when switching affect this?
Up to you after evaluating the pros and cons of one versus the other, but you can't get a bonus on a HTB and another on a LISA so it's better to choose one or the other.Would it be worth me transferring this money over or a partial transfer?0 -
I’ve opened a ‘Lifetime cash ISA’ with Skipton on the 22nd Dec 2017. So max a year of £4,000. That leaves £16,000 left of the yearly personal allowance.
But I'd also like an easy-access-rainy-day fund, an ISA makes sense due to the tax-free interest. But I can ONLY put money in the Lifetime OR another cash ISA on any given year. (That cash ISA being with the same provider?).
So how can I have a rainy-day-fund cash ISA easily accessible anytime alongside a Skipton cash LISA? and keep benefits from both??0 -
JackStrood wrote: »I’ve opened a ‘Lifetime cash ISA’ with Skipton on the 22nd Dec 2017. So max a year of £4,000. That leaves £16,000 left of the yearly personal allowance.
But I'd also like an easy-access-rainy-day fund, an ISA makes sense due to the tax-free interest. But I can ONLY put money in the Lifetime OR another cash ISA on any given year. (That cash ISA being with the same provider?).
So how can I have a rainy-day-fund cash ISA easily accessible anytime alongside a Skipton cash LISA? and keep benefits from both??
LISAs (Cash or S&S sub-types) are different to a Cash ISA so you can have both and contribute to both during the same tax year. You can have them with the same provider or different providers subject the annual contribution limits. From what you say you if you have put £4k in your LISA you should be fine to put up to £16k in a Cash ISA.
The situation is different with HTB ISAs which are a sub-type of Cash ISAs.
However Cash ISAs are not very attractive at the moment so would it be better to hold your cash savings in another type of savings account and use your Personal Savings Allowance (depending on your Income Tax band) to avoid paying any tax on the interest?
https://www.gov.uk/apply-tax-free-interest-on-savings
Alex.0
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