H2B transfer to LISA

Jakhar_2
Jakhar_2 Posts: 2 Newbie
in ISAs & tax-free savings
I have recently (few weeks ago) opened a help to buy ISA and have deposited £1400 so far (£1200 + 200). I will be opening a Lifetime ISA when they come out. I know that I can transfer my help to buy into my LISA, but I was wondering if this was just on eligible funds that you receive the bonus on?

For instance, I couldn't deposit £1000 into the H2B just before the end of the tax year and then transfer the full £2400 into my LISA? Or does the money have to be eligible for the 25% bonus initially?

Comments

  • masonic
    masonic Posts: 23,264 Forumite
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    How can you deposit another £1000 into your HTB ISA before the end of the tax year when the rules only allow you to contribute £200 per month after making the initial deposit?

    The answer to your question is that you'd receive the LISA bonus on the full balance of the HTB ISA when it is transferred.
  • Jakhar_2
    Jakhar_2 Posts: 2 Newbie
    As far as I was aware, you are permitted to physically deposit more than £200 a month into the account, but you will only receive the government bonus on up to £200 a month
  • badger09
    badger09 Posts: 11,205 Forumite
    First Post First Anniversary Name Dropper
    Jakhar wrote: »
    As far as I was aware, you are permitted to physically deposit more than £200 a month into the account, but you will only receive the government bonus on up to £200 a month

    If you have read the T&Cs of your HTB ISA, you will be aware that you are not allowed to deposit more than £200 per month (after the initial deposit).

    I suppose it is possible that the bank/building society's system might initially allow the process, but the excess will be rejected/refunded.
  • srisport
    srisport Posts: 198 Forumite
    edited 17 March 2017 at 10:27PM
    Hi all,

    I have been saving the maximum £200 per month to my HTB isa since last April, I'm not in the position at the moment to buy my first property so I am interested in opening the new LISA but I am unsure on the best option....

    If I'm reading it correctly I can have both a HTB isa and a LISA open at the same time but can I contribute to both of them in the same tax year?

    If I transfer my HTB isa over to my LISA on 6 April 2017 then the amount I transfer will not affect my LISA contribution limit of £4000 for the tax year 2017/18?

    What happens to the years worth of bonus I would of earned from my HTB isa if I transfer it over to the LISA?

    Any help and advise would be much appreciated.

    Regards.
  • masonic
    masonic Posts: 23,264 Forumite
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    You are correct about contributing to both and transferring the HTB ISA if you do so without paying any money into the HTB ISA during the next tax year.

    The bonus for the HTB ISA money will be paid at the end of the tax year, along with the bonus for the money you pay directly into the LISA.
  • t0mmyb0y
    t0mmyb0y Posts: 1 Newbie
    edited 18 March 2017 at 6:40PM
    Can I just double check that you mean the bonus from the H2B, if transferred within the year period, is also paid with the rest of the bonus?

    For example.

    6 April 2017 - LISA made and £1600 paid in.
    1 April 2018 (still within the year period from LISA creation) - H2B £4000 transferred (say £2000 from 15-16 and £2000 in 17-18)
    on 5 April 2018 the bonus paid 25% of £5600 so £1400.

    Is the above correct? if so could you please link me to some articles on this as i haven't been able to find much information on the help to buy ISA bonus on transfers into the LISA.

    Many thanks for your help with this! I have been struggling to find information on the current H2B and have been panicking that the bonus would be lost!

    Edit - Also can i just confirm that the £4000 LISA contribution limit is also eaten by any contributions to the H2B in the year.
  • masonic
    masonic Posts: 23,264 Forumite
    Photogenic Name Dropper First Post First Anniversary
    edited 18 March 2017 at 8:01PM
    t0mmyb0y wrote: »
    Can I just double check that you mean the bonus from the H2B, if transferred within the year period, is also paid with the rest of the bonus?
    Yes.
    if so could you please link me to some articles on this as i haven't been able to find much information on the help to buy ISA bonus on transfers into the LISA.
    Why not go straight to the source:
    https://www.gov.uk/government/consultations/draft-legislation-lifetime-isa
    You'd be interested mainly in clause 7.2 of the explanatory memorandum.

    The draft legislation in full can be found here. Transfer of the HTB ISA is covered in New Regulation 10A (3)(f) and (4)(c). See also New Regulation 37, in particular the definition of "qualifying addition", and clause (2)(10) of the same regulation for timing of the bonus payment.
    Edit - Also can i just confirm that the £4000 LISA contribution limit is also eaten by any contributions to the H2B in the year.
    Yes it is, if you then transfer in the HTB ISA.
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