Does a transfer into a LISA get a bonus?

MoneySavingUser · 9 April 2017 at 1:01PM

According to:

http://www.hl.co.uk/investment-services/lifetime-isa/transferring

What do I need to know before I transfer?

You can transfer up to £4,000 from your HL ISA to a Lifetime ISA each tax year and receive the 25% government bonus on the value of the transfer.

Transfers will count towards your Lifetime ISA allowance, but will not affect your overall ISA allowance.

If transferring ISAs from previous tax years (i.e. before 6 April 2017), you can transfer up to your Lifetime ISA allowance.

If transferring ISAs from this tax year (i.e. after 6 April 2017), this year’s subscription must be transferred in full. If this is greater than your remaining Lifetime ISA allowance it cannot be transferred.

All transfers into the HL Lifetime ISA must be made as cash. Any investments transferred will be sold first and you’ll be out of the market during the transfer.

So HL say you can transfer in £4k and still put £20k into other ISAs.

http://adviser.royallondon.com/news/pensions/2016/april/lifetime-isa-how-it-works/ says:

Any transfers in of existing ISA savings, or contributions above £4,000 will not attract a bonus.

Perhaps the RL info is out of date as it is older but would be nice to have confirmation.

masonic · 9 April 2017 at 2:17PM

Both are technically correct. You can transfer £4k from an existing ISA to a LISA each tax year, receive the bonus on it and it will not affect your existing allowance. So if you have a cash ISA from a previous tax year and transfer in £4,000 to the LISA, you can use the whole of your £20k in other ISAs.

Anything you transfer/contribute above £4k per tax year will not attract a bonus, but it's not possible to transfer/contribute more than £4k per tax year, so it seems that statement is redundant.

Edit: perhaps it is the placement of the comma in the RL statement that is confusing?

MoneySavingUser · 9 April 2017 at 3:03PM

Thanks masonic, that clears it up and yes maybe it is the comma.

glider3560 · 9 April 2017 at 5:48PM

The exception is a Help to Buy ISA, transferred before April 2018. This will receive the full 25% bonus and is not subject to the £4000 limit.

masonic · 9 April 2017 at 5:56PM

glider3560 wrote: »

The exception is a Help to Buy ISA, transferred before April 2018. This will receive the full 25% bonus and is not subject to the £4000 limit.

True, but only up to the value on 5th April 2017 plus interest. If you pay anything into the HTB ISA during this tax year, that would come out of the £4000 limit.

Padraig06 · 8 June 2017 at 11:23PM

I have just opened a cash isa using the minimum deposit (£1). However, would I need to deposit the max amount now (£4000) to receive the max bonus of £1000 after one year or so I just need to deposit it before my one year anniversary?

Katie-Jane · 9 June 2017 at 8:58AM

Hi Padriag06,

I believe you can deposit throughout the year, you will be paid a bonus in April 2018 on whatever you have in your LISA at that time.

ellpooty · 27 February 2018 at 9:36AM

The bank that holds my Lifetime ISA recently informed me that the 25% government bonus would only be paid "in the early part of the 2018/19 tax year". In other words, it might not be paid until potentially the end of May! If I complete on a property before the bonus is paid in, do I miss out on the bonus or is there some sort of mechanism for adding the bonus early in the event of completion?

I am quite concerned that the precise date on which the bonus is paid has been left so vague. Does anyone have anything more specific?

Furthermore, I was told that "from 6 April 2018 onwards, deposits that are received by the 5th of each month will receive a bonus payment on or around the 19th of that month."

My guess would be many are assuming it will be paid on the 1st or 6th of the month so again this information is dangerously vague and unpublicised.

Does anyone have anything more precise regarding the payment date?

eskbanker · 27 February 2018 at 9:53AM

My understanding is that bonus-earning periods run from the 6th of one month to the 5th of the next, and that an ISA manager then has up to 14 days to make the claim from the government agency, after which the latter then has up to 14 days to actually make the payment. Therefore it's up to 28 days after the end of the claim period, so with the first such period actually being a year to 5 April 2018 rather than a month, my understanding is that the first tranche of bonus payments should be received by 3 May 2018, and effectively 2nd/3rd of most months thereafter, but these are maximum timescales rather than fixed ones. Of course nobody knows how it'll actually pan out in reality and it wouldn't be entirely unexpected if there were delays first time round for all this!

I think some (but not all) of this is in the official scheme rules, perhaps someone else can chip in with definitive sources. Where did you get your quote from?

Edit: the info about claim periods is at clause 9B.25 of the scheme rules, but I can't see a reference there to how long the government has between claim and payment (although I'm sure I've seen 14 days mentioned somewhere):

For 2018/19 and each subsequent year the bonus will be claimed by the Lifetime ISA manager on a monthly basis in respect of qualifying additions made during that claim period. Claims must be made by the due date, i.e. within 14 days beginning with the day after the end of the claim period (which will run from 6th of a month to the 5th of the next calendar month).

ellpooty · 27 February 2018 at 5:51PM

That's helpful thankyou eskbanker. My quotes came directly from TheShareCentre who hold my Lifetime ISA. I emailed them asking for some detail on timings and this was the best they could give me.

But what they said would tie in with what you said since sending a claim for the money on the 6th would mean payment "on or around the 19th".

You mentioned possible delays, do you think there will be any form of appeal if the bonus were paid late? For example I plan to complete on the 24th May, if April's bonus had still not paid out would this be grounds for appeal? Basically I need to plan my completion date as early as possible without risking the bonus and the vagueness of the payment date is making this enormously difficult.

Also just to clarify, the Lifetime ISA can be used at completion and not at exchange if preferred, is that correct?

Thanks for the help!

eskbanker · 27 February 2018 at 8:24PM

ellpooty wrote: »

Also just to clarify, the Lifetime ISA can be used at completion and not at exchange if preferred, is that correct?

See https://www.moneysavingexpert.com/savings/lifetime-ISAs#property2:

You can get the money in time for exchange on your property, meaning you can use it towards the deposit requested by the person you are buying off (the exchange deposit), as well as the deposit the mortgage company will want on the property at completion. See the difference between these.

Does a transfer into a LISA get a bonus?

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