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  • FIRST POST
    • MSE Helen Saxon
    • By MSE Helen Saxon 16th Mar 16, 5:06 PM
    • 75Posts
    • 43Thanks
    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 47
    • soniashah
    • By soniashah 20th Sep 17, 9:48 PM
    • 2 Posts
    • 0 Thanks
    soniashah
    Buy to let and first time buyer?
    Hi All

    If I have a buy to let mortgage, am I still considered a first time buyer? Just wondering if I'd qualify to get a LISA.

    Thanks in advance
    • Alexland
    • By Alexland 20th Sep 17, 9:50 PM
    • 793 Posts
    • 493 Thanks
    Alexland
    BTL means you own property so are not a FTB. Govt don't care what mortgage deal you have - that's between you and your bank. You could still have a LISA to save and withdraw at 60.
    Last edited by Alexland; 20-09-2017 at 9:52 PM.
    • saver82990
    • By saver82990 25th Sep 17, 3:49 PM
    • 4 Posts
    • 1 Thanks
    saver82990
    Hi all,

    I have a question that relates to the way in which the government bonus is paid. I understand that in the 2017/2018 financial year, the 25% bonus is paid at the end of the year (end of April/beginning of May). I also understand that the bonus is paid monthly thereafter - is this monthly payment the full 25% bonus in the month that £4000 is paid in, or is it incremental payments each month totalling 25% at the end of the year?

    The reason I ask relates to when I should pay in to my LISA in the 2018/2019 tax year.

    Should I pay in £4000 right at the beginning of the 2018/2019 tax year (I assume this is preferable if the monthly payments are incremental totalling 25% at the end of the year)?

    or

    Should I pay in right at the end of the tax year (I assume this is preferable if the full bonus is paid in the month that the £4000 is paid in. This way I will get more interest from the money as it sits in another account).

    Thanks in advance for your help.
    • Lolly88
    • By Lolly88 25th Sep 17, 4:09 PM
    • 237 Posts
    • 737 Thanks
    Lolly88
    Hi all,

    I have a question that relates to the way in which the government bonus is paid. I understand that in the 2017/2018 financial year, the 25% bonus is paid at the end of the year (end of April/beginning of May). I also understand that the bonus is paid monthly thereafter - is this monthly payment the full 25% bonus in the month that £4000 is paid in, or is it incremental payments each month totalling 25% at the end of the year?

    The reason I ask relates to when I should pay in to my LISA in the 2018/2019 tax year.

    Should I pay in £4000 right at the beginning of the 2018/2019 tax year (I assume this is preferable if the monthly payments are incremental totalling 25% at the end of the year)?

    or

    Should I pay in right at the end of the tax year (I assume this is preferable if the full bonus is paid in the month that the £4000 is paid in. This way I will get more interest from the money as it sits in another account).

    Thanks in advance for your help.
    Originally posted by saver82990
    How much you depost will have no bearing on how interest is paid. Not everyone will be able to deposit the full £4000. As with all interest rates the advertised rate is what you are paid in total per annum. So per month the interest you will receive will be 0.25/12 = 0.02 interest per month. So it is financially adventageous to pay the full amount in as soon as you can.... no where else is offering 25% interest per annum!
    House Fund - £30142.19
    Save 7k in 2017 #6: £7142.19/£7,000
    Save 12k in 2016: £14,750/£12000 - Save 6k in 2015: £8250/£6000
    • Alexland
    • By Alexland 25th Sep 17, 4:45 PM
    • 793 Posts
    • 493 Thanks
    Alexland
    Yes after the first year with delayed bonus in April/May you will get the next bonus in proportion to how much you payed in each month. So if you pay in 100 you will soon get a 25 bonus and you could do this across the tax year to keep getting bonuses up to the annual limits.

    Skipton will pay the interest based on daily balance of the account so if you pay in earlier you will get the bonus earlier and therefore gain more interest across the year.

    However the Skipton interest is really low so there is a case for saving in a higher interest 5pc account and making the contribution towards the end of the tax year even though you would be forfeiting most of the low interest on the bonus for that year

    Alex
    • Lolly88
    • By Lolly88 25th Sep 17, 5:04 PM
    • 237 Posts
    • 737 Thanks
    Lolly88
    Yes after the first year with delayed bonus in April/May you will get the next bonus in proportion to how much you payed in each month. So if you pay in 100 you will soon get a 25 bonus and you could do this across the tax year to keep getting bonuses up to the annual limits.

    Skipton will pay the interest based on daily balance of the account so if you pay in earlier you will get the bonus earlier and therefore gain more interest across the year.

    However the Skipton interest is really low so there is a case for saving in a higher interest 5pc account and making the contribution towards the end of the tax year even though you would be forfeiting most of the low interest on the bonus for that year

    Alex
    Originally posted by Alexland
    That's not correct at all. If you paid in £100 in one month the interest earned in that month would work out as around £2 on that £100 alone excluding interest earned on the rest of the money in the account. And then around £25 in total in the whole year. The government are not paying 25% interest per month/

    There really isn't a case for saving in a higher 5% account, yes the interest paid by Skipton is poor but the interest paid by the government hugely outweighs that.
    House Fund - £30142.19
    Save 7k in 2017 #6: £7142.19/£7,000
    Save 12k in 2016: £14,750/£12000 - Save 6k in 2015: £8250/£6000
    • Ed-1
    • By Ed-1 25th Sep 17, 5:55 PM
    • 2,043 Posts
    • 1,102 Thanks
    Ed-1
    That's not correct at all. If you paid in £100 in one month the interest earned in that month would work out as around £2 on that £100 alone excluding interest earned on the rest of the money in the account. And then around £25 in total in the whole year. The government are not paying 25% interest per month/

    There really isn't a case for saving in a higher 5% account, yes the interest paid by Skipton is poor but the interest paid by the government hugely outweighs that.
    Originally posted by Lolly88
    The Government don't pay interest. They pay a 25% bonus on up to £4,000 in that year.

    You can get that £1,000 bonus at any time during the tax year. Getting the bonus earlier in the year means you'd get 0.5% interest on that £1,000 which you wouldn't get otherwise. But you'd also have to only get 0.5% interest on the £4,000 you'd put in which could've been earning e.g. 5% elsewhere.

    5% x 4,000 = £200.
    0.5% x 5,000 = £25.

    I know what I'd be doing and it's not what you suggest.
    • Alexland
    • By Alexland 25th Sep 17, 10:48 PM
    • 793 Posts
    • 493 Thanks
    Alexland
    @Lolly88 not sure you read my post properly (try reading it again) and I think you are getting confused between the government bonus and the Skipton interest? The government don't pay any interest (and don't care how long it is deposited during the tax year) but Skipton would pay interest on the contribution and bonus from the dates they go into the account.

    The interest from Skipton earned in a day, month or year would be negligible which is why I suggested you would be better using a 5% regular saver and then LISA wrapping before the end of the tax year to get the 25% bonus.

    Alex
    Last edited by Alexland; 26-09-2017 at 12:45 PM.
    • saver82990
    • By saver82990 25th Sep 17, 10:49 PM
    • 4 Posts
    • 1 Thanks
    saver82990
    The Government don't pay interest. They pay a 25% bonus on up to £4,000 in that year.

    You can get that £1,000 bonus at any time during the tax year. Getting the bonus earlier in the year means you'd get 0.5% interest on that £1,000 which you wouldn't get otherwise. But you'd also have to only get 0.5% interest on the £4,000 you'd put in which could've been earning e.g. 5% elsewhere.

    5% x 4,000 = £200.
    0.5% x 5,000 = £25.

    I know what I'd be doing and it's not what you suggest.
    Thanks for your answer. So basically it would make most sense to wait until the final month of the 2018/2019 tax year before transferring in £4000. This way I can earn more in a higher interest account during the year before getting the full £1000 bonus paid at the end of the year?
    • Alexland
    • By Alexland 25th Sep 17, 11:01 PM
    • 793 Posts
    • 493 Thanks
    Alexland
    Yes because the interest on getting the £1000 bonus early is worth less than the improved interest you would get by putting the £4000 somewhere better for most of the tax year.

    However providers do get busy towards the end of the tax year so it might be worth opening the account early with a minimum deposit so that all you have to do is contribute more. This means if there are delays (eg verifying your identity, etc) that's all sorted in advance. You don't want to have it so close that you risk not getting the bonus!

    Alex
    Last edited by Alexland; 25-09-2017 at 11:04 PM.
    • saver82990
    • By saver82990 25th Sep 17, 11:21 PM
    • 4 Posts
    • 1 Thanks
    saver82990
    Yes because the interest on getting the £1000 bonus early is worth less than the improved interest you would get by putting the £4000 somewhere better for most of the tax year.

    However providers do get busy towards the end of the tax year so it might be worth opening the account early with a minimum deposit so that all you have to do is contribute more. This means if there are delays (eg verifying your identity, etc) that's all sorted in advance. You don't want to have it so close that you risk not getting the bonus!

    Alex
    Originally posted by Alexland
    Thanks. Yeah I opened an account with £1 back in June to avoid any delays.

    One other question:
    When transferring money from my Help To Buy ISA into my LISA it states that "any Help To Buy ISA contributions made before 6 April 2017 don't eat up your LISA allowance". Does this include interest that has been earned on money in my HTB ISA?

    For example, on 6 April 2017 I had £4289 in my HTB ISA (£4200 in contributions plus £89 in interest). Can I transfer the whole £4289 without it affecting my LISA allowance for this year, or will the £89 be deducted from the amount I can put in this year (i.e. only allowing me to put in another £3910)?

    Again, thanks in advance for any help!
    • Alexland
    • By Alexland 25th Sep 17, 11:34 PM
    • 793 Posts
    • 493 Thanks
    Alexland
    When transfering any type of ISA from a previous tax year (even if you are changing the type of ISA) any growth (interest, dividends, etc) that has occured within the ISA wrapper is not treated as a new contribution to the ISA.

    Contribution limits apply for adding new money from your bank etc into an ISA wrapper. ISA transfers and growth are not contributions.

    Basically this year you can put £4k in from you bank etc. This can go directly into the LISA or by transfering a HTB you have contributed to this year and then toping up the LISA to no more than £4k.

    Alex
    Last edited by Alexland; 25-09-2017 at 11:42 PM.
    • saver82990
    • By saver82990 25th Sep 17, 11:50 PM
    • 4 Posts
    • 1 Thanks
    saver82990
    When transfering any type of ISA from a previous tax year (even if you are changing the type of ISA) any growth (interest, dividends, etc) that has occured within the ISA wrapper is not treated as a new contribution to the ISA.

    Contribution limits apply for adding new money from your bank etc into an ISA wrapper. ISA transfers and growth are not contributions.

    Basically this year you can put £4k in from you bank etc. This can go directly into the LISA or by transfering a HTB you have contributed to this year and then toping up the LISA to no more than £4k.

    Alex
    Originally posted by Alexland
    Perfect! Thanks for your help!
    • Alexland
    • By Alexland 26th Sep 17, 12:55 PM
    • 793 Posts
    • 493 Thanks
    Alexland
    No problem - the 'when to deposit the money' question is a good one for Cash LISAs - but as we have a pair of S&S LISAs (saving for 60 and already making contributions to multiple pensions each month) then the return on the LISA contribution is roughly the same as having it invested elsewhere (except the total Nutmeg fees are 0.27% higher than our Vanguard ISA with a VLS fund) so we will continue to fill them near the start of the year to get the growth (or loss if we are unlucky) on the bonus as early as possible.

    Nutmeg recently added a reassuring green tick next to the account valuation saying we will get the maximum £1000 bonus next year which is a nice touch as you could fool yourself to think it's already in there!

    Also as Nutmeg is our only ETF based investment you can get a preview of how the days trading has affected the value of our OEIC units (with similar asset allocations) in pension and ISA wrappers before the result is known the next morning.
    Last edited by Alexland; 26-09-2017 at 1:19 PM.
    • Lolly88
    • By Lolly88 28th Sep 17, 9:08 PM
    • 237 Posts
    • 737 Thanks
    Lolly88
    Sorry, I know the government are paying a bonus and not interest. I was getting my wires a bit crossed with the way the H2B ISA bonus is calculated. Sorry for the bad advice saver82290.
    House Fund - £30142.19
    Save 7k in 2017 #6: £7142.19/£7,000
    Save 12k in 2016: £14,750/£12000 - Save 6k in 2015: £8250/£6000
    • KEWyeth
    • By KEWyeth 2nd Oct 17, 8:03 PM
    • 1 Posts
    • 0 Thanks
    KEWyeth
    Can I still get the LISA government bonus if I look at buying a house/flat on a help to buy scheme or is it one or the other??
    • Alexland
    • By Alexland 2nd Oct 17, 8:56 PM
    • 793 Posts
    • 493 Thanks
    Alexland
    You can transfer your HTB ISA into a LISA (subject to age limit) to enable you to make a bigger contribution and so get a bigger bonus this year.

    Using a LISA doesn't stop you from using other government initiatives to prop up house builders and the overall property market. Those schemes are mostly for the benefit of others anyway!!
    Last edited by Alexland; 02-10-2017 at 9:02 PM.
    • pilotamx
    • By pilotamx 3rd Oct 17, 8:00 AM
    • 25 Posts
    • 0 Thanks
    pilotamx
    Hi all,

    can a LISA with 4k be converted to an Help-to-buy this year and get a 25% bonus on top? I opened a LISA with Nutmeg online few months ago but I am not happy with it and I am considering to move into an help-to-buy but I am not sure if I can do it. Apparently, if I just close LISA and open an help-to-buy I cannot start with the maximum yearly contribution to get full bonus in April 2018.

    Thanks
    S
    • Alexland
    • By Alexland 3rd Oct 17, 10:28 AM
    • 793 Posts
    • 493 Thanks
    Alexland
    Why are you unhappy with Nutmeg? Surely you cannot be so unhappy you would want a smaller bonus? We are with Nutmeg and they have been great.
    • ciaomagre
    • By ciaomagre 3rd Oct 17, 2:17 PM
    • 3 Posts
    • 0 Thanks
    ciaomagre
    Hi all - I just want to double check I've understood this properly. I've just opened a Skipton cash Lifetime ISA with £1 balance. I'm just about to deposit a lump sum of £3,999, bringing my total balance at the max yearly allowance of £4,000.

    1) By end of April 2018, that means an extra government bonus of £1,000 is going to be paid into my balance all at once, bringing it up to £5,000. Is that correct?

    2) As soon as new tax year stars in May 2018, I may then make another lump sum of £4,000. Throughout the tax year 2018/2019 I will receive monthly bonuses (around £80ish a month), and by April 2019 I will have received total monthly bonus' that add up to exactly £1,000. Is that correct?

    3) So sticking to that, by April 2019 my balance will be £10,000, which will be composed of 2 x £4,000 of my own cash, plus 2 x government bonuses of £1,000. Have I understood all of this correctly?

    Given that I'm not looking to buy in the short term but plan to in the next 3 - 5 years, I would be totally mad not to take advantage of the lifetime ISA wouldn't I? I think the above sounds like a no brainer but I'm a bit tentative about fully doing it because of all the negative comment about them...
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