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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



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    Thanks folks,
Page 38
    • Ed-1
    • By Ed-1 14th Jun 17, 9:42 PM
    • 2,043 Posts
    • 1,102 Thanks
    Ed-1
    That's great for us - strange though that you could just deposit £4,000 one day and the next day it would be effectively worth £5,000
    Originally posted by Blades1071
    I take it you don't have a pension? That's exactly how they work, except the 25% bonus (for basic rate and non-taxpayers) and 67% bonus (for higher rate taxpayers) is called 'tax relief'.
    • owenjt
    • By owenjt 16th Jun 17, 11:25 AM
    • 8 Posts
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    owenjt
    Have looked through the website and on here and just wanted to confirm I'm correct in my thinking about HTB and LISA and my situation...

    I have a HTB ISA paying 3.50% and am paying in the max £200 a month (currently have just over £4200). I plan to open a LISA now and then in March 2018 transfer my HTB into the LISA and top up with £1800 (therefore using my £4000 allowance - 11 months x £200 HTB = £2200 + £1800). Then I should get a £1900 bonus in April 2018:

    £900 interest on £3600 paid into HTB before April 2017
    £550 interest on £2200 paid into HTB April 2017 - March 2018
    £450 interest on £1800 paid into LISA March 2018

    Is this correct and is this the best way to get the maximum return on my investment?
    • eskbanker
    • By eskbanker 16th Jun 17, 11:59 AM
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    eskbanker
    The principles are correct, although, as pointed out in previous posts, it's a bonus not interest (i.e. it's not dependent on how long money has been in the account(s)).

    However, your HTB account will have interest applied at the time of transferring (it should also have had some applied before that too if it's been open for over a year) and you'll get 25% of that too.
    • owenjt
    • By owenjt 16th Jun 17, 1:14 PM
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    owenjt
    The principles are correct, although, as pointed out in previous posts, it's a bonus not interest (i.e. it's not dependent on how long money has been in the account(s)).

    However, your HTB account will have interest applied at the time of transferring (it should also have had some applied before that too if it's been open for over a year) and you'll get 25% of that too.
    Originally posted by eskbanker
    Ah yes, you are correct. Meant bonus not interest. Good point about the interest from the HTB - this won't count as part of the £4K LISA limit though will it?

    So is this the best way to maximise my investment (pending I can transfer my HTB in March 2018)?
    • Ed-1
    • By Ed-1 16th Jun 17, 1:52 PM
    • 2,043 Posts
    • 1,102 Thanks
    Ed-1
    Ah yes, you are correct. Meant bonus not interest. Good point about the interest from the HTB - this won't count as part of the £4K LISA limit though will it?

    So is this the best way to maximise my investment (pending I can transfer my HTB in March 2018)?
    Originally posted by owenjt
    It will if it was accrued/paid after 5th April 2017.
    • owenjt
    • By owenjt 16th Jun 17, 7:50 PM
    • 8 Posts
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    owenjt
    Another couple of questions to clarify:
    • Can you transfer your LISA to another provider penalty free, should a better account become available?
    • Is it correct that from April 2018 the LISA will pay the 25% bonus on a monthly basis on your contribution for the previous month i.e. I could put in £4000 in April 2018 and receive a £1000 bonus in May 2018?
    • eskbanker
    • By eskbanker 17th Jun 17, 12:38 AM
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    eskbanker
    Can you transfer your LISA to another provider penalty free, should a better account become available?
    Originally posted by owenjt
    Depends on whether the receiving one accepts inbound transfers (they're not obliged to) - also, I believe that the currently available S&S LISAs typically charge fees for transferring out.

    Is it correct that from April 2018 the LISA will pay the 25% bonus on a monthly basis on your contribution for the previous month i.e. I could put in £4000 in April 2018 and receive a £1000 bonus in May 2018?
    Originally posted by owenjt
    Yes.
    • Kami J
    • By Kami J 17th Jun 17, 10:11 AM
    • 4 Posts
    • 1 Thanks
    Kami J
    I have an HTB that I am still paying into and opened a 100 Nutmeg LISA in April. I'm planning to buy in late 2018 / early 2019.

    I have intended to switch to a cash LISA when it becomes available, but seeing how low the Skipton rate is made me question that. Is there a good reason NOT to stay with Nutmeg, transfer in my HTB in March 2018 and use it when bonuses hit?

    I know the S&S are more volatile than cash, but with inflation as it is, Skipton's 0.5% is a losing game. I picked the lowest risk profile on Nutmeg, so I am thinking that in the worst case, I will lose a little bit, but potentially can gain a bit more - but overall the swing in either direction won't be much so why bother with switching? Am I missing something?
    • greenglide
    • By greenglide 17th Jun 17, 10:54 AM
    • 2,919 Posts
    • 1,894 Thanks
    greenglide
    I know the S&S are more volatile than cash, but with inflation as it is, Skipton's 0.5% is a losing game. I picked the lowest risk profile on Nutmeg, so I am thinking that in the worst case, I will lose a little bit, but potentially can gain a bit more - but overall the swing in either direction won't be much so why bother with switching? Am I missing something?
    Stock market crash next week, month? Pound sinks 20%. Political instability grows?

    Something unexpected can cause major changes in investments over a year or so.

    You are happy to take this risk because Skipton are only paying 0.5% ?
    • NevvyC
    • By NevvyC 17th Jun 17, 11:24 AM
    • 40 Posts
    • 1 Thanks
    NevvyC
    You're not opening two cash LISAs in one year. A LISA is only open once it is funded. So you can 'open' a new one with nil balance and transfer another one in without a problem.

    It's the same as any other ISA in that respect.
    Originally posted by Ed-1

    Good point. Regarding this...

    I opened my Nutmeg S&S LISA in May (with the minimum, mandatory £100)
    I have since opened a Skipton CASH LISA (and did so funding with £1 -- as there was no option for £0 on the online application form "£1+" ...)

    I'm assuming this isn't a problem as one is a S&S Lifetime ISA and the other is CASH Lifetime ISA ... PRETTY sure I'm ok in this respect but would like confirmation as there's so much mis-information flying around and the same questions getting repeated is causing confusion when I revisit the thread every few weeks!

    Many thanks


    (To add to this - my aim all along, like many others, is to transfer my Nutmeg into my Skipton.... Thereby closing the Nutmeg account ; resulting in just the one Lifetime ISA....)
    ...
    My worry comes that somewhere there may be a stipulation against having 2 LISAs opened in the same tax year (classed as "subscribed to" on account of one having £100 in and one having £1 in...) purely from a technicality point-of-view, thus resulting in some annoying admin clause ?
    Last edited by NevvyC; 17-06-2017 at 12:09 PM.
    • eskbanker
    • By eskbanker 17th Jun 17, 11:59 AM
    • 5,890 Posts
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    eskbanker
    I opened my Nutmeg S&S LISA in May (with the minimum, mandatory £100)
    I have since opened a Skipton CASH LISA (and did so funding with £1 -- as there was no option for £0 on the online application form "£1+" ...)

    I'm assuming this isn't a problem as one is a S&S Lifetime ISA and the other is CASH Lifetime ISA ... PRETTY sure I'm ok in this respect but would like confirmation as there's so much mis-information flying around and the same questions getting repeated is causing confusion when I revisit the thread every few weeks!
    Originally posted by NevvyC
    No, it's not OK - you're allowed to pay current year subscriptions into one and only one of each ISA type, where the types are:
    Cash (including HTB)
    S&S
    LISA
    IFISA

    So, you're definitely not allowed to pay into two LISAs in the same tax year! The fact that they're both for small amounts doesn't change this....
    • Somerset La La La
    • By Somerset La La La 17th Jun 17, 1:18 PM
    • 446 Posts
    • 139 Thanks
    Somerset La La La
    I think a lot of people will fall foul of the rules by that. Despite it being technically not allowed, HMRC etc aren't going to penalise - it's not like you've tried to put 3 or 4k in each then combine them!

    I opened with £1, although I think there was a option to open with £0 and transfer in. IMO Skipton could make that a bit clearer, as there was a message saying something along the lines of "your account isn't open until you pay in".

    Although that is technically correct, I think it should be clarified by Skipton that people are ok to open on £0 and have X days to transfer in....


    Out of interest - and I don't think it'd ever get to this stage - what's the penalty for failing to comply with ISA rules...???
    Ex-Bankrupt, Discharged 09/2015
    Capital One - Jul 2016, £3,750 Never ending 0%....
    Aqua Reward (0.5% Cashback) - Nov 2016 - £1,950
    Vanquis Chrome 24.7% - July 2017, £1,000
    Car Loan - Sept 2017 - £15k outstanding, early settlement = £10k....
    Rebuild for Mortgage (10/2018)
    • Somerset La La La
    • By Somerset La La La 17th Jun 17, 1:25 PM
    • 446 Posts
    • 139 Thanks
    Somerset La La La
    Update on my transfer in to Skipton - I sent them both together. Both arrived @ Skipton on 13th.

    Text regarding my "Lifetime ISA Transfer" on 13th, which is linked to Barclays one. Identical text and email on 14th, which appears to be my Nutmeg one.

    Both are listed in Skipton Online -> Manage Account -> Pay in -> Stocks & Shares ISA.

    Strangely Barclays is valued at £0 (updated 13/6). Nutmeg was valued @ £0, updated 13/6. It's now valued at the princely sum of £0.01, updated 13/6.

    Barclays H2B ISA had a full transfer out completed on 15th (which due to way Barclays system operates, put me overdrawn as closing interest isn't credited to statement!).

    It's now completely disappeared from my online banking, so I presume Skipton will credit it early next week.

    Lifetime ISA at Nutmeg - no update, and no changes at Nutmeg's end.
    Ex-Bankrupt, Discharged 09/2015
    Capital One - Jul 2016, £3,750 Never ending 0%....
    Aqua Reward (0.5% Cashback) - Nov 2016 - £1,950
    Vanquis Chrome 24.7% - July 2017, £1,000
    Car Loan - Sept 2017 - £15k outstanding, early settlement = £10k....
    Rebuild for Mortgage (10/2018)
    • NevvyC
    • By NevvyC 17th Jun 17, 1:32 PM
    • 40 Posts
    • 1 Thanks
    NevvyC
    Exactly... To all of the above.

    I'd even enquired regarding the Skipton LISA with a few questions and the advisor said to open it with a zero balance and then transfer in (sure, that's what I'd aimed to do anyway...) - but was there an option for this..? No... And exactly as you say above "your account isn't open until you pay in."

    So got on the blower earlier as soon as I'd realised I now have 2 LISAs technically open (even though I intend to transfer one to t'other to only have one....) and the advisor said they didn't think it would be an issue IF transferring. They confirmed with someone else that shouldn't have 2 LISAs in same tax year -- but my understanding (and theirs) of this would mainly to be the avoision of racking up different 1K bonuses from different LISAs ... However, I don't want to get to the point of next May only for the petty HMRC that we all know are so friendly, helpful and forgiving to refuse a hefty 25% bonus just because of this 'technacaility' -- for this reason I think I shall close my Skipton account (within the 30 day grace period; which states that "if done-so in this time period will not count as a current tax year LISA subscription") think that's the safest bet even when people on the phone are telling you different/attempting to reassure -> where will they be next May when you're being refused a bonus because of some annoying factor such as this...?

    Infuriating!

    Surely, Skipton should have 'blocked' my application/initial £1 deposit in reality then? Why can't something flag up from your (required) NI number with a warning saying you're already subscribed to a current tax year LISA, it is 2017 afterall....
    • NevvyC
    • By NevvyC 17th Jun 17, 1:37 PM
    • 40 Posts
    • 1 Thanks
    NevvyC
    No, it's not OK - you're allowed to pay current year subscriptions into one and only one of each ISA type, where the types are:
    Cash (including HTB)
    S&S
    LISA
    IFISA

    So, you're definitely not allowed to pay into two LISAs in the same tax year! The fact that they're both for small amounts doesn't change this....
    Originally posted by eskbanker

    So in reality, what's the penalty for this ?

    And if it's that big of a no-no and Skipton were expecting so many S&S transfers-in ; why hadn't they made it clearer / included an option to simply open with a zero balance ...

    Didn't want to throw the entire application away based on the "your account isn't open until....etc."
    • Somerset La La La
    • By Somerset La La La 17th Jun 17, 1:48 PM
    • 446 Posts
    • 139 Thanks
    Somerset La La La
    I was tempted to close my Skipton account, then re-open with zero and transfer into that account (from memory I *think* you're allocated an account number, despite seeing the "your account isn't open until it's funded" screen).

    Howver, I'd already sent the forms off for my H2B & LISA transfers by the time I read on here that it was, technically speaking, an issue. So it'd cause more problems if I cancel in the grace period, given that two products are transferring in.

    As the bonus isn't credited until 2018, I imagine there won't be any issue at all, as long as you don't go over the max limit.

    I also imagine the bonuses are applied for and credited in bulk. E.g. Skipton declare to HMRC that they have -

    "1,000 correctly funded & conforming LISAs, with KYC checks completed & NI numbers obtained.... within these is a total aggregate balance of (say) £3.5m, therefore we would like the £750k bonus, which we will divvy out to the account holders as per the rules..."

    Even if HMRC track per NI number, I guess it'll be something like

    1: NI XX XX XX XX A. Saved - £4,000. Claim - £1,000
    2: NI XX XX XX XX B. Saved - £4,000. Claim - £1,000

    etc. By that stage, the issue of overlapping deposits is long gone.

    Skipton won't want to flag anyone up they become aware of, because their CS would become inundated with complaints - two in this thread alone!
    Ex-Bankrupt, Discharged 09/2015
    Capital One - Jul 2016, £3,750 Never ending 0%....
    Aqua Reward (0.5% Cashback) - Nov 2016 - £1,950
    Vanquis Chrome 24.7% - July 2017, £1,000
    Car Loan - Sept 2017 - £15k outstanding, early settlement = £10k....
    Rebuild for Mortgage (10/2018)
    • NevvyC
    • By NevvyC 17th Jun 17, 2:09 PM
    • 40 Posts
    • 1 Thanks
    NevvyC
    Well, exactly... This was my (and the CSA's) thinking; that it'll all be hunkydory so long as you don't go over the allowance limit for the year (plus transferring one into the other means they sum to 1 upon the other closing anyways -- and if it was that big of a deal, Skitpon would have a facility blocking it or the option to open without deposit or wouldn't allow deposits in if you had announced you already had a funded LISA - which have only been made available as of THIS tax year... Etc.etc.etc.)
    • isasmurf
    • By isasmurf 17th Jun 17, 2:28 PM
    • 1,718 Posts
    • 738 Thanks
    isasmurf
    Out of interest - and I don't think it'd ever get to this stage - what's the penalty for failing to comply with ISA rules...???
    Originally posted by Somerset La La La
    So in reality, what's the penalty for this ?
    Originally posted by NevvyC
    When HMRC run their compliance programme after the end of the tax year and discover invalid ISAs, after confirming their discovery with you, they will issue a discovery notice to the ISA provider. This will inform them to treat the invalid subscriptions as if they weren't in an ISA. This means any income or growth from them will be taxable. Lifetime ISA bonuses will also be repaid to HMRC.

    HMRC can "repair" invalid subscriptions that are within the annual allowance by instructing the ISA manager of a date from which the invalid subscriptions can restart having an ISA tax exemption.

    Where over the annual allowance HMRC will instruct the ISA provider to remove subscriptions that are over the £20k/£4k allowance.


    However, when you transfer current year subscriptions in an ISA, those subscriptions are treated as having been made with the new ISA manager, and never with the original ISA manager. Indeed, if the old ISA is fully transferred to another ISA manager it will not be included in the end of year reporting to HMRC and so as far as HMRC are concerned you only hold the one ISA.
    • Kami J
    • By Kami J 17th Jun 17, 5:26 PM
    • 4 Posts
    • 1 Thanks
    Kami J
    I know the S&S are more volatile than cash, but with inflation as it is, Skipton's 0.5% is a losing game. I picked the lowest risk profile on Nutmeg, so I am thinking that in the worst case, I will lose a little bit, but potentially can gain a bit more - but overall the swing in either direction won't be much so why bother with switching? Am I missing something?
    Ē Stock market crash next week, month? Pound sinks 20%. Political instability grows?

    Something unexpected can cause major changes in investments over a year or so.

    You are happy to take this risk because Skipton are only paying 0.5% ?
    I think you missed the bit where I only transfer the lot into Nutmeg in March 2018. Both my FD 5% regular saver and the current HTB beat Skipton's 0.5%.

    If I withdraw shortly after, the Nutmeg should be just as good as Skipton? And if I decide to wait another few months, I can then take my pick of possible cash LISAs in April 2018?
    • lpyy
    • By lpyy 18th Jun 17, 7:46 PM
    • 82 Posts
    • 14 Thanks
    lpyy
    No, it's not OK - you're allowed to pay current year subscriptions into one and only one of each ISA type, where the types are:
    Cash (including HTB)
    S&S
    LISA
    IFISA

    So, you're definitely not allowed to pay into two LISAs in the same tax year! The fact that they're both for small amounts doesn't change this....
    Originally posted by eskbanker
    If I open a cash LISA now with £1 to get the clock ticking [as the account is not fully open until it's paid!], and continue to pay £200 into HTB every month until Dec (?) 17, then transfer the whole balance from HTB to LISA. Could I in this case be able to open another normal cash ISA in Dec 17 and contribute into both LISA and Cash ISA in the same tax year, as long as the total <= £20,000?

    Any inputs would be greatly appreciated!
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