Lifetime ISA Query
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JamesJdMcN
Posts: 5 Forumite
Hi there,
I currently have a Help2Buy ISA and am saving the maximum £200/month
I am unsure whether or not to open a LISA with £1 right now or not as I am unsure whether or not I can personally afford to save more than £200/month.
Would I be financially better off saving the £200/month at the ~2% H2B ISA or something like £210/month in the 0.5% Skipton LISA?
All replies appreciated,
James
I currently have a Help2Buy ISA and am saving the maximum £200/month
I am unsure whether or not to open a LISA with £1 right now or not as I am unsure whether or not I can personally afford to save more than £200/month.
Would I be financially better off saving the £200/month at the ~2% H2B ISA or something like £210/month in the 0.5% Skipton LISA?
All replies appreciated,
James
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Comments
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The HTB obviously earns more interest but it may make sense to open a LISA at least a year before you're wanting to buy. Opening one now and putting in a token quid keeps your options open, you can always fund it properly later in the tax year if you wish to....0
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Thanks, what happens if I don't swap over to the LISA by April next year once i've put £1 in it?0
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JamesJdMcN wrote: »Thanks, what happens if I don't swap over to the LISA by April next year once i've put £1 in it?
You have a one-off opportunity in the 2017/18 tax year to transfer Help to Buy ISA funds up to 5th April 2017 without it contributing to the £4,000 LISA limit.
So you can pay into LISA:- Help to Buy ISA funds up to 5th April 2017 as long as this transfer is done before 6th April 2018;
- £4,000 in 2017/18 in addition;
- £4,000 in 2018/19 etc.
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JamesJdMcN wrote: »Thanks, what happens if I don't swap over to the LISA by April next year once i've put £1 in it?
The LISA will still exist and accept contributions in the future, but you'll have missed the opportunity to transfer the money into the LISA within your current year LISA allowance (which is basically £4000 plus [whatever you had in the help to buy at the start of this tax year, end of day 5 April 2017]).
If you don't move it this tax year you'll miss the current year window that allows the £4000 plus the special opportunity to move any previous year contributions without it affecting the £4000. You'd be welcome to transfer the money during the the 2018/19 or 2019/20 tax years, or later, but then the entire amount you transfer in from the HTB is going to get counted as new money against that tax year's allowance.
In other words, you may find yourself with some money stuck in your HTB or stuck in your other bank accounts that can't fit into your LISA until another year rolls around, when it would have fitted just fine if you had made use of all the allowances in the years you got them.0 -
Great so I should definitely invest £1 now and then next March/April swap my Help2Buy over0
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JamesJdMcN wrote: »Great so I should definitely invest £1 now and then next March/April swap my Help2Buy over
You should definitely transfer the Help to Buy funds that were paid in before 6th April 2017 over. Whether you want to transfer all of the Help to Buy ISA funds over depends on how much savings you have and the interest rate of the Help to Buy ISA. It may be worthwhile keeping this year's money in the Help to Buy ISA and continuing to use it for the interest rate...
EDIT: Just seen you have a 2% rate so this doesn't necessarily work for you.0 -
I think i'll open the Skipton 0.5% and stick in £1. Once my interest comes in on the Help2Buy i'll swap it over (or end of March 2018)0
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