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
    • 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 53
    • Ryry02
    • By Ryry02 20th Nov 17, 7:32 PM
    • 1 Posts
    • 0 Thanks
    Ryry02
    Hi everyone,

    Newbie here, looking to open a Skipton LISA very soon as at the minute my savings are just sitting in my bank ( I know) !

    Anyway my question is: Is the £4000 you can get a bonus on per calendar year (ie actual 12 months) or is it the financial year? So if I put money in tomorrow do I get the bonus yearly in November or in April? (I know it has to be a year before I can use the bonus) Basically I know HTB ISA is per month and I want to know if with the LISA I can put in £4000 now then £4000 in May 2018 for example, or do I have to wait until November 2018 to put in the second £4000?

    Thank you in advance!!
    • Alexland
    • By Alexland 20th Nov 17, 8:11 PM
    • 731 Posts
    • 459 Thanks
    Alexland
    The £4k contribution limit is per tax year which ends on 5th April. So you can put up to £4k in now and another up to £4k in on or after 6th April. You can make multiple deposits within the tax year if you haven't got a lump sum.

    The 25% bonus relating to this tax year's contribution should be April/May and after that around a month after the contribution. So it should be possible to get to a balance of £10k + interest by May/June. The LISA needs to be open 12 months before you can use it to buy a property.

    "Until 1752 the tax year in Great Britain started on 25th March, old New Year’s Day. In order to ensure no loss of tax revenue, the Treasury decided that the taxation year which started on 25th March 1752 would be of the usual length (365 days) and therefore it would end on 4th April, the following tax year beginning on 5th April.

    The next difficulty was that 1800 was not a leap year in the new Gregorian calendar but would have been in the old Julian system. Therefore the Treasury moved the year start again from 5th to 6th of April, and this date has remained unchanged ever since."

    http://www.ebs.ltd.uk/news/why-does-the-uk-tax-year-end-on-5th-april/

    Alex
    Last edited by Alexland; 20-11-2017 at 8:17 PM.
    • iamthesnow
    • By iamthesnow 20th Nov 17, 9:58 PM
    • 1 Posts
    • 0 Thanks
    iamthesnow
    Hi, why are there no high street banks offering LISAs?
    • eskbanker
    • By eskbanker 21st Nov 17, 12:02 AM
    • 5,887 Posts
    • 5,844 Thanks
    eskbanker
    Hi, why are there no high street banks offering LISAs?
    Originally posted by iamthesnow
    Skipton Building Society has 87 branches, some of which are on high streets, but none of the others decided that it was worthwhile jumping through all the hoops involved in creating and maintaining a product that was presumably expected to be a fairly niche one, and by not doing so that was fairly self-fulfilling!
    • rachlikeswinter
    • By rachlikeswinter 22nd Nov 17, 4:34 PM
    • 42 Posts
    • 129 Thanks
    rachlikeswinter
    "Until 1752 the tax year in Great Britain started on 25th March, old New Yearís Day. In order to ensure no loss of tax revenue, the Treasury decided that the taxation year which started on 25th March 1752 would be of the usual length (365 days) and therefore it would end on 4th April, the following tax year beginning on 5th April.

    The next difficulty was that 1800 was not a leap year in the new Gregorian calendar but would have been in the old Julian system. Therefore the Treasury moved the year start again from 5th to 6th of April, and this date has remained unchanged ever since."

    http://www.ebs.ltd.uk/news/why-does-the-uk-tax-year-end-on-5th-april/

    Alex
    Originally posted by Alexland
    That is SO interesting. I've often wondered why it is when it is. I thought it was to do with Spring bringing 'newness' or something
    • YellowStarling
    • By YellowStarling 22nd Nov 17, 10:15 PM
    • 23 Posts
    • 6 Thanks
    YellowStarling
    Hi,


    Not a FTB, so this is a LISA-retirement query: If I'm a higher rate tax payer but have maxed my employer contributions on my pre-tax works pension, and then have enough AVCs coming out pre-tax to take me well into the 20% income tax bracket, is it worth me chucking in an (affordable) extra £4k into a S&S LISA for £1k bonus plus natural S&S growth or chuck the same £4k into more pre-tax AVCs? Seems benefit-neutral to me unless I'm missing something, which is possibly the 100% tax-free withdrawal from the LISA vs the 25% tax-free withdrawal from my pension at age 60/55 respectively?
    Don't hope. Decide.
    • Bazbrown
    • By Bazbrown 23rd Nov 17, 8:35 AM
    • 1 Posts
    • 0 Thanks
    Bazbrown
    Hi

    Im new to MSE, but have been trying to find out info on the new Voluntary Right to Buy, being brought in for Housing associations (VRTB).

    My question around LISA, is whether this can be used against a VRTB? as the budget yesterdaty announced an extension of the pilot scheme to the Midlands region, ready for the national roll out. So would want to get a LISA in place, for the 1 year before hand.

    Thanks
    Barry
    • pphillips
    • By pphillips 23rd Nov 17, 2:33 PM
    • 233 Posts
    • 187 Thanks
    pphillips
    Hi,


    Not a FTB, so this is a LISA-retirement query: If I'm a higher rate tax payer but have maxed my employer contributions on my pre-tax works pension, and then have enough AVCs coming out pre-tax to take me well into the 20% income tax bracket, is it worth me chucking in an (affordable) extra £4k into a S&S LISA for £1k bonus plus natural S&S growth or chuck the same £4k into more pre-tax AVCs? Seems benefit-neutral to me unless I'm missing something, which is possibly the 100% tax-free withdrawal from the LISA vs the 25% tax-free withdrawal from my pension at age 60/55 respectively?
    Originally posted by YellowStarling
    I think what you're missing is what happens your pension when you die vs what happens to your lifetime isa when you die. You probably can't take all of the money out of your pension before you die and what you don't take out you lose but with a lifetime isa the whole amount will become part of your estate when you die. You also need to take into account that drawing from a lifetime isa is tax free, whereas drawing from a pension is a taxable earning.
    Last edited by pphillips; 23-11-2017 at 2:39 PM.
    • Alexland
    • By Alexland 23rd Nov 17, 7:40 PM
    • 731 Posts
    • 459 Thanks
    Alexland
    Not a FTB, so this is a LISA-retirement query: If I'm a higher rate tax payer but have maxed my employer contributions on my pre-tax works pension, and then have enough AVCs coming out pre-tax to take me well into the 20% income tax bracket, is it worth me chucking in an (affordable) extra £4k into a S&S LISA for £1k bonus plus natural S&S growth or chuck the same £4k into more pre-tax AVCs? Seems benefit-neutral to me unless I'm missing something, which is possibly the 100% tax-free withdrawal from the LISA vs the 25% tax-free withdrawal from my pension at age 60/55 respectively?
    Originally posted by YellowStarling
    It really depends if your employer offers salary sacrifice to also save National Insurance.

    If you are only saving the 20% income tax then if you have to pay income tax on 75% of the additional contributions when they turn into income in retirement (assuming your state pension and existing pension contributions use up your personal allowance) then a LISA is better as there is no tax to pay on withdrawals.

    If salary sacrifice saves you both the 20% income tax and 12% national insurance then even after paying tax in retirement the benefit is roughly comparable to a LISA.

    There are other considerations such as access age (LISA is higher but offers flexibility to be lower with a penalty), entitlement to benefits (LISA is considered accessable savings), fees (employers sometimes pay fees on pensions), inheritance tax planning (pension is not part of your estate and different rules apply at age 75) and if you are at risk of accumulating such a large pension pot that the lifetime allowance or paying higher rate tax in retirement become an issue.

    I am using the LISA due to the risk of hitting the lifetime allowance on my pensions.

    Alex
    • Alexland
    • By Alexland 23rd Nov 17, 8:51 PM
    • 731 Posts
    • 459 Thanks
    Alexland
    My question around LISA, is whether this can be used against a VRTB? as the budget yesterdaty announced an extension of the pilot scheme to the Midlands region, ready for the national roll out. So would want to get a LISA in place, for the 1 year before hand.
    Originally posted by Bazbrown
    It's a very interesting question. To be certain, as there is a small penalty if the LISA is not usable and so you then withdraw, have you tried asking a Governmentís Right to Buy Agent?

    https://righttobuy.gov.uk/agent-service/

    Alex.
    • radoslaff
    • By radoslaff 27th Nov 17, 8:59 AM
    • 43 Posts
    • 11 Thanks
    radoslaff
    I've read quite a lot about LISA and I'm planning moving my and my wife's Help To Buy ISAs into new Skipton LISAs. The problem is that recently we have had quite a few searches on our credit files with a few more to come. Do they make a search when applying for LISA? In general this is not a credit product so they shouldn't, but it's just common sense not a rule.
    • badger09
    • By badger09 27th Nov 17, 3:37 PM
    • 5,567 Posts
    • 4,875 Thanks
    badger09
    I've read quite a lot about LISA and I'm planning moving my and my wife's Help To Buy ISAs into new Skipton LISAs. The problem is that recently we have had quite a few searches on our credit files with a few more to come. Do they make a search when applying for LISA? In general this is not a credit product so they shouldn't, but it's just common sense not a rule.
    Originally posted by radoslaff
    No, because as you say, no credit is involved.

    They will obviously carry out an ID check though as part of the application process. Extract from the online form:

    'I understand that an identity check may be carried out by both CallCredit Ltd and a fraud prevention agency against the details that I enter.'
    I'm a supporter of dunstonh
    • Isaac :)
    • By Isaac :) 27th Nov 17, 10:01 PM
    • 12 Posts
    • 0 Thanks
    Isaac :)
    Hi all,

    I'm looking at opening the Skipton LISA. At the moment my savings are in current accounts paying a lot more interest than the 0.75% that the LISA offers. My question is therefore whether it would be possible/advisable to pay the £4k (or whatever I can afford) in one lump sum at the end of each financial year (say, 31st March) so that I can benefit from the higher interest rates offered by my current accounts, while still picking up the 25% bonus on what I put in the LISA during a given financial year. Or would the bonus be prorated down depending on the length of time during that financial year my money was in the LISA, as is the case for interest payments?

    Does my question make sense?

    Thanks.
    Last edited by Isaac :); 27-11-2017 at 10:03 PM.
    • Alexland
    • By Alexland 27th Nov 17, 10:57 PM
    • 731 Posts
    • 459 Thanks
    Alexland
    Hi

    Yes you can make the contribution towards the end of the tax year (which ends on 5th April) and you will still get the full 25% bonus. HMRC don't care how long it has been in the account only that it occurred in the correct period.

    However providers get busy towards the end of the tax year so it's advisable to open the account nice and early and make an initial deposit (incase they have problems with verifying your identity or linking to your bank account).

    Personally I don't like the stress of running things right to the deadline (incase their website has problems, etc) so I would put the final contribution into the account around a month in advance.

    Alex
    • Isaac :)
    • By Isaac :) 28th Nov 17, 2:40 PM
    • 12 Posts
    • 0 Thanks
    Isaac :)
    Hi

    Yes you can make the contribution towards the end of the tax year (which ends on 5th April) and you will still get the full 25% bonus. HMRC don't care how long it has been in the account only that it occurred in the correct period.

    However providers get busy towards the end of the tax year so it's advisable to open the account nice and early and make an initial deposit (incase they have problems with verifying your identity or linking to your bank account).

    Personally I don't like the stress of running things right to the deadline (incase their website has problems, etc) so I would put the final contribution into the account around a month in advance.

    Alex
    Originally posted by Alexland

    Thanks!

    Will this still be the case after April next year when the bonus will be paid monthly?
    • Alexland
    • By Alexland 28th Nov 17, 7:52 PM
    • 731 Posts
    • 459 Thanks
    Alexland
    Yes HMRC really don't care when you make the contribution as long as you don't exceed the annual limit. The bonus is always 25%.
    • Duggary
    • By Duggary 29th Nov 17, 10:45 AM
    • 5 Posts
    • 1 Thanks
    Duggary
    I am looking into opening a LISA for myself, I just need to clarify a few things

    #1 If I used my LISA for a residential mortgage, how long would I have to live in the house before I can sell the house or let it out. I would assume there are stipulations in place where I wouldn't be able to buy a house and then rent it out, for example, 3 months later.

    #2 If I used my LISA for a residential mortgage, and then inherited an additional property, would there be any penalties.
    • eskbanker
    • By eskbanker 29th Nov 17, 1:05 PM
    • 5,887 Posts
    • 5,844 Thanks
    eskbanker
    #1 If I used my LISA for a residential mortgage, how long would I have to live in the house before I can sell the house or let it out. I would assume there are stipulations in place where I wouldn't be able to buy a house and then rent it out, for example, 3 months later.
    Originally posted by Duggary
    There's no specified timescale but see the various scenarios discussed at
    https://blog.moneysavingexpert.com/2016/04/19/can-you-rent-out-a-home-bought-with-a-help-to-buy-isalifetime-isa/

    #2 If I used my LISA for a residential mortgage, and then inherited an additional property, would there be any penalties.
    Originally posted by Duggary
    No, assuming you were a first-time buyer at the point of using the LISA for the mortgaged purchase.
    • rachlikeswinter
    • By rachlikeswinter 29th Nov 17, 3:46 PM
    • 42 Posts
    • 129 Thanks
    rachlikeswinter
    FYI, just received this email from Skipton:

    "If youíre thinking about transferring an existing Help to Buy ISA or other ISA into your Skipton Cash Lifetime ISA in this tax year, our window to do so closes on 1 March 2018. After this date, you will no longer be able to apply to transfer into your Skipton Cash Lifetime ISA in the 2017/18 tax year. This is the only opportunity to make a single transfer of the balance of a Help to Buy ISA as at 5 April 2017, without it counting towards your £4,000 annual Lifetime ISA allowance.

    Why have we introduced this cut-off date?

    We anticipate increasing levels of demand for transfers in the run up to the tax year end. As it can take up to 30 days for ISA funds to be transferred between providers, we want to ensure that customersí requests can be processed in time to avoid disappointment."
    • Duggary
    • By Duggary 29th Nov 17, 7:42 PM
    • 5 Posts
    • 1 Thanks
    Duggary
    Thanks for the advice
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

4,426Posts Today

8,311Users online

Martin's Twitter