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  • FIRST POST
    • MSE Helen Saxon
    • By MSE Helen Saxon 16th Mar 16, 5:06 PM
    • 75Posts
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    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 27
    • eskbanker
    • By eskbanker 13th Apr 17, 2:45 PM
    • 4,423 Posts
    • 4,149 Thanks
    eskbanker
    It's the property value that counts, not an individual's share of it, so you can only use the proceeds of a LISA (without penalty) for a property valued below £450K.
    Last edited by eskbanker; 13-04-2017 at 7:35 PM.
    • cullet16
    • By cullet16 14th Apr 17, 12:45 AM
    • 1 Posts
    • 0 Thanks
    cullet16
    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
    • By masonic 14th Apr 17, 8:04 AM
    • 9,126 Posts
    • 6,261 Thanks
    masonic
    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?
    Originally posted by cullet16
    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.
    • NevvyC
    • By NevvyC 14th Apr 17, 9:00 PM
    • 24 Posts
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    NevvyC
    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?
    Originally posted by eskbanker

    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!)
    Last edited by NevvyC; 14-04-2017 at 9:12 PM.
    • masonic
    • By masonic 14th Apr 17, 9:19 PM
    • 9,126 Posts
    • 6,261 Thanks
    masonic
    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!)
    Originally posted by NevvyC
    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.
    Last edited by masonic; 14-04-2017 at 9:22 PM.
    • mb16
    • By mb16 17th Apr 17, 10:57 AM
    • 1 Posts
    • 0 Thanks
    mb16
    LISA Bonus
    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
    • By masonic 17th Apr 17, 11:04 AM
    • 9,126 Posts
    • 6,261 Thanks
    masonic
    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)?
    Originally posted by mb16
    It will be paid in full during May 2018.
    • Ed-1
    • By Ed-1 18th Apr 17, 1:39 PM
    • 1,785 Posts
    • 950 Thanks
    Ed-1
    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".
    Originally posted by masonic
    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
    • By masonic 18th Apr 17, 7:15 PM
    • 9,126 Posts
    • 6,261 Thanks
    masonic
    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
    Originally posted by Ed-1
    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
    • By Ed-1 18th Apr 17, 8:56 PM
    • 1,785 Posts
    • 950 Thanks
    Ed-1
    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.
    Originally posted by masonic
    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
    • By masonic 18th Apr 17, 9:03 PM
    • 9,126 Posts
    • 6,261 Thanks
    masonic
    How would you use a flexible ISA?
    Originally posted by Ed-1
    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).
    • Nuts57
    • By Nuts57 18th Apr 17, 9:40 PM
    • 1 Posts
    • 0 Thanks
    Nuts57
    Drip feeding into S&S ISA
    The payment of interest is confusing. My two children aged 19 and 21 have opened a stocks & shares ISA each but we're unsure whether it is better to do future top ups each month, or as a lump sum, to spread the risk and get the most interest. Is 25% added to the final amount you've accrued at the end of this financial year i.e. March/April 2018? That seems quite generous if you start off with £100 then put in £3900 in the last month. Sorry if I'm not understanding!
    • jackknight
    • By jackknight 18th Apr 17, 10:36 PM
    • 5 Posts
    • 0 Thanks
    jackknight
    Keen For More Info
    I've been eagerly awaiting the arrival of April 6th and the launch of the new LISA, so I'm extremely disapointed that there seems to actually be no LISAs available to open now the new tax year is here.

    Will MSE give us an immediate heads up as soon some become available as I'm keen to swtich from H2B to LISA. I've cancelled my current direct debit to the H2B because I don't want to pay into an ISA in this tax year and scupper myself from opening a LISA. However, if there aren't any available then I'm missing out on the payments towards the house by sitting here waiting for a LISA to turn up.

    Advice please?
    ************************************************** *******************

    jack-knight.graphics
    • Ed-1
    • By Ed-1 18th Apr 17, 10:46 PM
    • 1,785 Posts
    • 950 Thanks
    Ed-1
    I've been eagerly awaiting the arrival of April 6th and the launch of the new LISA, so I'm extremely disapointed that there seems to actually be no LISAs available to open now the new tax year is here.

    Will MSE give us an immediate heads up as soon some become available as I'm keen to swtich from H2B to LISA. I've cancelled my current direct debit to the H2B because I don't want to pay into an ISA in this tax year and scupper myself from opening a LISA. However, if there aren't any available then I'm missing out on the payments towards the house by sitting here waiting for a LISA to turn up.

    Advice please?
    Originally posted by jackknight
    There are stocks and shares LISAs available. Skipton are releasing a cash LISA in June.

    You can pay into other ISAs as well as a LISA.
    • Ed-1
    • By Ed-1 18th Apr 17, 10:49 PM
    • 1,785 Posts
    • 950 Thanks
    Ed-1
    The payment of interest is confusing. My two children aged 19 and 21 have opened a stocks & shares ISA each but we're unsure whether it is better to do future top ups each month, or as a lump sum, to spread the risk and get the most interest. Is 25% added to the final amount you've accrued at the end of this financial year i.e. March/April 2018? That seems quite generous if you start off with £100 then put in £3900 in the last month. Sorry if I'm not understanding!
    Originally posted by Nuts57
    The 25% isn't interest. It's a bonus on the amount subscribed in the year regardless of when it was subscribed or any interest/investment change.
    • polgrad21
    • By polgrad21 19th Apr 17, 3:08 PM
    • 1 Posts
    • 0 Thanks
    polgrad21
    Thanks for the guide!
    On the upper cap (£450,000) - is it clear whether or not this will change with inflation/market prices? I'm considering opening a LISA but looking to buy in London in 8-10 years and there's no way of knowing whether £450,000 will get you a decent two bed flat by then. Seems like it's asking people to gamble on prices not rising much?
    • bowlhead99
    • By bowlhead99 19th Apr 17, 3:32 PM
    • 6,291 Posts
    • 11,094 Thanks
    bowlhead99
    Thanks for the guide!
    On the upper cap (£450,000) - is it clear whether or not this will change with inflation/market prices? I'm considering opening a LISA but looking to buy in London in 8-10 years and there's no way of knowing whether £450,000 will get you a decent two bed flat by then. Seems like it's asking people to gamble on prices not rising much?
    Originally posted by polgrad21
    There has been no indication that the £450k or the £4k will increase to keep pace with inflation, house price inflation, or anything else. Over time, some HMRC limits have ticked up each year or most years, and others haven't at all.

    £450k is already insufficient to buy a good 2-bed in many nicer parts of London (and even a 1 bed in some) but is still well in excess of what would buy you a five bed in many parts of the country. Politically it can certainly be argued that if you have the salary and most of the deposit to buy a property costing almost half a million quid, you're probably not most in need of government support. So, i wouldn't go into it with the expectation that the limit is going to be going up.

    If at some point it becomes obvious that the property you want is going to be out of your reach on the scheme, you can give up on using it for a deposit pot, abandon saving new money into it and start using it for retirement savings instead while doing your property savings in a different product. You could take your money back mostly or entirely, with a small penalty.

    If you think you might want to go over the £450k limit and therefore will be taking your cash back out without buying, you would be better using the help-to-buy ISA instead which has a lower annual limit but penalty-free withdrawal if you decide it's going to be no good to you.
    Last edited by bowlhead99; 19-04-2017 at 3:36 PM.
    • Ed-1
    • By Ed-1 19th Apr 17, 4:53 PM
    • 1,785 Posts
    • 950 Thanks
    Ed-1
    Thanks for the guide!
    On the upper cap (£450,000) - is it clear whether or not this will change with inflation/market prices? I'm considering opening a LISA but looking to buy in London in 8-10 years and there's no way of knowing whether £450,000 will get you a decent two bed flat by then. Seems like it's asking people to gamble on prices not rising much?
    Originally posted by polgrad21
    No automatic uprating mechanism has been provided for in the legislation. But like all amounts (e.g. ISA limit), they can be changed in the future by amending the regulations. In the case of the £4,000 limit, it can't be decreased unless the House of Commons approves a decrease in a vote. However it can be increased without a vote.
    • NevvyC
    • By NevvyC 19th Apr 17, 7:24 PM
    • 24 Posts
    • 0 Thanks
    NevvyC
    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.
    Originally posted by masonic

    Yup, property will definitely be mine (and in my name...) and after looking into the 'Springboard mortgage' more - it appears their lump sum just gets held in an account and then returned to them after a few years and doesn't even count towards the property - it's just a safeguard sorta thing... Ie. Mortgage repayments / cost of the property don't even take it into consideration, thus the H2B/LISA combo (with bonuses) would help out greatly at bringing the cost of the property and ergo, repayments down!
    • NevvyC
    • By NevvyC 19th Apr 17, 7:32 PM
    • 24 Posts
    • 0 Thanks
    NevvyC
    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?
    Originally posted by Ed-1

    Quite. Perhaps best practice come end of tax year will be to transfer H2B to LISA and let the banks see & calculate what max allowance is left to contribute to LISA (H2B interest calculated & paid on closure / transfer of ISA I imagine...) then just use leftover for following tax year LISA contribution .....
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