Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • MSE Helen Saxon
    • By MSE Helen Saxon 16th Mar 16, 5:06 PM
    • 75Posts
    • 44Thanks
    MSE Helen Saxon
    Lifetime ISAs guide
    • #1
    • 16th Mar 16, 5:06 PM
    Lifetime ISAs guide 16th Mar 16 at 5:06 PM
    Hi!

    This is the discussion thread for the



    Click reply below to discuss. If you havenít already, join the forum to reply. If you arenít sure how it all works, read our New to Forum? Intro Guide.


    Thanks folks,
Page 60
    • ryath
    • By ryath 17th Jan 18, 1:59 AM
    • 33 Posts
    • 54 Thanks
    ryath
    Personally I would just use the Halifax calculation on the form for an easy life. If there is a systematic errors in the way this has been implemented by the HTB providers (we haven't heard one getting it right yet?) then I wouldn't expect HMRC to come down to harshly on individual customers.

    Alex
    Originally posted by Alexland
    Thank you Alex. Yesterday I posted my HL S&S LISA transfer form alongside my HTB ISA (pre 5/4/17 funds) transfer form to Skipton, forgetting I have only paid £100 into my S&S LISA this tax year. Can I make up the remaining £3900 somehow or have I lost out by not paying it into my HL account first and then transferring it, bearing in mind the paying into one LISA per tax year rule?
    Save £12k in 2017 target = £7,501.58 / £6,000 125.03% No. 033
    • Alexland
    • By Alexland 17th Jan 18, 6:42 AM
    • 1,137 Posts
    • 769 Thanks
    Alexland
    From an HMRC perspective it's the same LISA transfering between providers. You can continue to contribute to it up the the annual limit.

    I don't have a Skipton LISA but many providers will tell you how much more you can contribute based on what they have been told by your previous ISA (HTB and LISA) providers.
    Last edited by Alexland; 17-01-2018 at 6:46 AM.
    • Seanage
    • By Seanage 18th Jan 18, 6:11 PM
    • 1 Posts
    • 0 Thanks
    Seanage
    I've just had an offer accepted on a house and I'm trying to work out whether I'm better off transferring my HtB ISA (plus a little bit more) into the LISA in both 17/18 and 18/19. Does anyone know when the bonuses for the LISA will be applied to the accounts?


    My understanding is that bonus will be applied at the end of the tax year (so 5th April) and then monthly, so if I put in the annual limit on say, 31st March and 6th April, I should have both years' bonuses available by the start of May. Is there any chance that's right?


    The other complication is that it's with Nutmeg, so they won't arrange the transfer. Would there be any penalties / disadvantages I should look out for if I'm transferring it myself?
    • Alexland
    • By Alexland 18th Jan 18, 8:06 PM
    • 1,137 Posts
    • 769 Thanks
    Alexland
    I assume your situation meets all criteria for using the HTB ISA against the property purchase.

    You need to have had your LISA open 12 months before it can be used to purchase property. The first bonus relating to this tax year (and previous if transfering an old HTB ISA) is due in late April or early May. After that the bonus is due 1-2 months after the contribution so May or June at earliest.

    This is the first time LISA bonuses have been paid so there is possibility of unexpected delays with some or all providers.

    You would need to transfer the LISA to Skipton then transfer the HTB ISA to Skipton ASAP as they gave a cutoff date in a months time. It's always the gaining provider that arranges the transfer.

    Alternatively use the HTB ISA for the property purchase and use the LISA to invest for retirement alongside a workplace pension.

    So if your offer had been accepted, for your situation, do you expect to be able to hold back on using the money until May+? How established is your chain, etc?

    Alex
    Last edited by Alexland; 18-01-2018 at 8:21 PM.
    • Cash-Strapped.T32
    • By Cash-Strapped.T32 20th Jan 18, 1:50 PM
    • 444 Posts
    • 241 Thanks
    Cash-Strapped.T32
    Rather than begin a new thread, may I just jump in to get a quick sanity-check to make sure I'm not missing something obvious please?

    I'm just about to open a Skipton Cash LISA, and intend to transfer my entire H2B (Natwest) over to it, with a view to buying in apx 5yrs (keeping open the option of later transferring to a S&S Lisa in the next couple of years, if I think this 5yr plan will be delayed significantly).

    I opened my H2B in December '16 and deposit the usual £200 p/m.
    I work out my pre 17/18 contributions as being £1607.45 inc interest.
    Current balance as is £3443.86.
    My Feb deposit will make it £3640 ish, and presumably in March, the transfer process will be in the middle of happening so I won't want to contribute anything that month...

    This being the case, since the entire amount I'm transferring is below the 4k limit for 17/18, I don't even need to factor-in my pre 17/18 contributions, is that correct?

    I don't have enough money to instantly max it out in April, so will be drip-feeding contributions over the course of the coming year - but even if I did, as of April/18, the annual limit resets so any contributions from that point on, simply need to stay under the £4k for tax year 18/19, right?


    Sorry for the obvious question - I ask because I was sat there working out how much my pre 17/18 contributions amounted to, and then it occurred to me that I was wasting my time even thinking about it, if the entire amount being transferred was under £4k...
    • Alexland
    • By Alexland 20th Jan 18, 7:01 PM
    • 1,137 Posts
    • 769 Thanks
    Alexland
    Yes if your total HTB transfer with interest is less than £4k and you don't intend to add any more this tax year that's fine you are definitely under the LISA limit for contributions this tax year.

    However get the transfer going asap and give Skipton as much notice as possible to get their work done. You can always add your Feb/March contributions to the LISA once transferred by 5th April.

    If all your contributions were made this tax year you will have a full £4k LISA allowance next tax year. Given the low interest rate you might be better putting the money into the LISA as a lump sum towards the end of the tax year in future so it can earn better money elsewhere in the meantime.

    It is tricky with being 5 years away from purchasing - too short for S&S without risking a loss and too long for cash at a rubbish interest rate. No perfect answer for your situation.

    Alex
    Last edited by Alexland; 20-01-2018 at 7:06 PM.
    • Cash-Strapped.T32
    • By Cash-Strapped.T32 20th Jan 18, 10:36 PM
    • 444 Posts
    • 241 Thanks
    Cash-Strapped.T32
    Thanks Alex, much appreciated mate.

    Yes, I agree that the time-frame isn't ideal - if I knew for certain I was going to be looking at 6-7yrs plus I'd jump at a S&S LISA right now; In fact, indecision over whether to go cash or S&S is why I've waited this long to set up my LISA in the first place..

    The larger part of me is saying settle for cash and just be happy with the 25%, but the smaller (yet more vocal) part of me is saying push my timeframe out to that 6-7yrs & go S&S... Gah, decisions!

    Cheers for the straightforward advice though.
    Last edited by Cash-Strapped.T32; 20-01-2018 at 10:54 PM.
    • Alexland
    • By Alexland 21st Jan 18, 7:16 AM
    • 1,137 Posts
    • 769 Thanks
    Alexland
    Yes, I agree that the time-frame isn't ideal - if I knew for certain I was going to be looking at 6-7yrs plus I'd jump at a S&S LISA right now; In fact, indecision over whether to go cash or S&S is why I've waited this long to set up my LISA in the first place..

    The larger part of me is saying settle for cash and just be happy with the 25%, but the smaller (yet more vocal) part of me is saying push my timeframe out to that 6-7yrs & go S&S... Gah, decisions!
    Originally posted by Cash-Strapped.T32
    In your position I wouldn't be happy having at least 5 years in which my money was being erroded by inflation. That's likely to be at least a 10% drop in spending power.

    Historically over a 5 year investment period in global shares you would be around 10% likely to end in a loss position. However historically the loss at the end might be as much as 30% (say a 50% drop after a few years of low returns, etc).

    https://www.nutmeg.com/nutmegonomics/increasing-your-chances-of-positive-portfolio-returns-the-facts-about-long-term-investing/

    One consideration is that a balanced investment in stocks and bonds on a traditional 60/40 ratio within a S&S LISA wrapper is going to be a lot more stable than a 100% equities investment. Your probably of loss over 5 years is still probably around 10% but the extent of the loss should be lower. With regular contributions you will also benefit from pound cost averaging.

    It's also worth remembering that when stock markets drop badly you sometimes see drops to a lesser extent, across other asset types such as bonds and property. So even if your LISA drops (a bit less because it's balanced) then maybe the price of your purchase might have also dropped so everything is still relative. Still every market correction is different.

    If you do go S&S remember Nutmeg don't accept HTB transfers and AJ Bell charge £1.50 per trade so HL is probably your best option for regular contributions. In your position I would consider investing in a balanced fund such as Vanguard LifeStrategy 60. I wouldn't go too heavily into 'safe' bonds as that strategy would carry it's own risks and the upside is limited.

    If you do well in the first couple of years maybe move back to cash for the last few years to protect the gains from a drop at the end.

    However I am not allowed to offer advice, just raise options and considerations and give my thoughts. It's your call on risk of downside for potential return.

    Whatever you do - good luck!

    Alex.
    Last edited by Alexland; 21-01-2018 at 7:43 AM.
    • Cash-Strapped.T32
    • By Cash-Strapped.T32 21st Jan 18, 10:34 AM
    • 444 Posts
    • 241 Thanks
    Cash-Strapped.T32
    Thank you - really, thanks, that has given me some serious food for thought.
    I guess I was sort sleep-walking into a default position of going cash & just putting up with the downsides, and while the info is there for all of us to see, your putting it bluntly like that is kind of the kick up the a**e I need to give it proper consideration.

    I'd been toying with AJ Bell but I hadn't really considered the higher cost for drip-feeding, I'm going to take a good look at HL today.

    By the way, I like how you turned my idea around - I was considering starting in cash & then moving to S&S if it looked like my time-scale was going to run longer, but starting in S&S and then moving to cash (if I make gains worth locking-in) gives more flexibility doesn't it; As obvious as it seems I didn't even see that option!

    Ok - again, I appreciate you taking the time to put that into words, if I do go S&S hopefully you & the other well informed guys won't mind giving your opinions on what I've decided to put my savings into.
    Cheers!
    • Alexland
    • By Alexland 21st Jan 18, 11:03 AM
    • 1,137 Posts
    • 769 Thanks
    Alexland
    Yup. Is a question on if you just accept defeat or risk it for a potentially greater prize.

    A further option would be to gradually move the 60/40 portfolio to cash over the years - say 1% per month so you have more certainty of outcome for the final years? Again these trades would be free on HL.

    If you are only investing for 5 years or less also worth considering account closure charges so maybe build a spreadsheet to determine if AJ Bell or HL work out cheaper for your situation.
    Last edited by Alexland; 21-01-2018 at 12:39 PM.
    • NevvyC
    • By NevvyC 22nd Jan 18, 9:55 PM
    • 41 Posts
    • 1 Thanks
    NevvyC
    Just to confirm H2Bs and LISAs are BOTH tax-free savings products ?

    Also, is anyone able to clarify regarding interest earned on H2B balances post 05.04.17 (does this detract from the maximum 4K LISA subscription allowance for the 17/18 tax year as I'm seeing conflicting ideas reading through this thread!)

    Thanks in advance
    • Alexland
    • By Alexland 22nd Jan 18, 10:15 PM
    • 1,137 Posts
    • 769 Thanks
    Alexland
    Just to confirm H2Bs and LISAs are BOTH tax-free savings products ?
    Originally posted by NevvyC
    Yes.

    Also, is anyone able to clarify regarding interest earned on H2B balances post 05.04.17 (does this detract from the maximum 4K LISA subscription allowance for the 17/18 tax year as I'm seeing conflicting ideas reading through this thread!)
    Originally posted by NevvyC
    I think we are in agreement that it should reduce the £4k limit but this doesn't seem to be happening in practice with the information that HTB providers are handing over to LISA providers.

    Alex
    • Cash-Strapped.T32
    • By Cash-Strapped.T32 22nd Jan 18, 11:10 PM
    • 444 Posts
    • 241 Thanks
    Cash-Strapped.T32
    If you are only investing for 5 years or less also worth considering account closure charges so maybe build a spreadsheet to determine if AJ Bell or HL work out cheaper for your situation.
    Originally posted by Alexland
    Thanks for the advice - Well, I built a small spreadsheet to compare the two, HL vs AJB; It's very close, but notwithstanding any closure charges, HL comes out on top.

    Iirc the HL closure fee is £25+vat - taking that into account HL still comes out on top, albeit by a smaller margin.

    (Ok, it is very simplified, only looking at the annual fee of 0.45% for HL, 0.25% for AJB, plus the monthly £1.50 purchase fee for AJB) - assuming I'm contributing a fixed amount each month, into a single fund).

    I know it's a bit of a crude sketch I've drawn for myself, but I'm erring toward HL.
    I'm assuming 5yrs, but then again it's entirely possible I'll be saving for 6 or more yrs (my timeframe is determined more by the amount I save, than by some kind of personal situation) so if it looks like I'll be purchasing sooner, I can think about moving either back to cash -albeit with a bit of a fee - or more heavily towards bonds/etc...

    Cheers again Alex, much appreciated.
    Last edited by Cash-Strapped.T32; Yesterday at 11:32 PM.
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

243Posts Today

1,932Users online

Martin's Twitter