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  • FIRST POST
    • MrsJam
    • By MrsJam 9th Jun 17, 6:26 PM
    • 112Posts
    • 148Thanks
    MrsJam
    Help to Buy ISA not getting the bonus!
    • #1
    • 9th Jun 17, 6:26 PM
    Help to Buy ISA not getting the bonus! 9th Jun 17 at 6:26 PM
    Hi all

    Would appreciate some help if possible.

    Daughter has just today completed on a property.

    She has a Help to Buy ISA worth about £4000.

    Solicitor has informed her that the bonus on top of that from the Government as been rejected.

    She's phoned her bank and they say because she closed one HTB ISA and opened another in the same year with a different bank she's not entitled to the bonus. Is this correct?

    She's set to lose out on approx £1150

    Thanks for any help!
Page 1
    • eskbanker
    • By eskbanker 9th Jun 17, 6:55 PM
    • 5,611 Posts
    • 5,451 Thanks
    eskbanker
    • #2
    • 9th Jun 17, 6:55 PM
    • #2
    • 9th Jun 17, 6:55 PM
    It's correct that closing one and opening another in the same tax year (other than via the proper transfer process) is against the rules but paying no bonus at all seems a bit harsh. Exactly which accounts were opened and closed when and how much was paid into each? What was she asked to declare when opening the second one?

    There is a dispute process after a bonus rejection, see section 7.5 (G) of the scheme rules, but worth establishing all of the relevant facts first to determine if there's a case to be made....
    • MrsJam
    • By MrsJam 9th Jun 17, 7:42 PM
    • 112 Posts
    • 148 Thanks
    MrsJam
    • #3
    • 9th Jun 17, 7:42 PM
    • #3
    • 9th Jun 17, 7:42 PM
    Thanks for the reply and the info.

    It was in December 2015 when she closed down one ISA, then opened another one because it had a better interest rate. All this was done online, she said she wasn't asked to declare anything.

    She had approx £1200 in her account at that time.
    • Ed-1
    • By Ed-1 9th Jun 17, 8:27 PM
    • 2,006 Posts
    • 1,084 Thanks
    Ed-1
    • #4
    • 9th Jun 17, 8:27 PM
    • #4
    • 9th Jun 17, 8:27 PM
    Thanks for the reply and the info.

    It was in December 2015 when she closed down one ISA, then opened another one because it had a better interest rate. All this was done online, she said she wasn't asked to declare anything.

    She had approx £1200 in her account at that time.
    Originally posted by MrsJam
    Why didn't she transfer it rather than close it down?
    • isasmurf
    • By isasmurf 9th Jun 17, 10:15 PM
    • 1,718 Posts
    • 738 Thanks
    isasmurf
    • #5
    • 9th Jun 17, 10:15 PM
    • #5
    • 9th Jun 17, 10:15 PM
    If the first ISA was fully closed before the second ISA was opened then I think, if I've interpreted Scheme Rule 5.5B correctly, it should still qualify for the bonus under the self-transfer clause in the ISA regulations, but I'd welcome opinions from others.

    In the event that HMRC “repairs” (as that term is used under and for the purposes of Regulation 4A of the ISA Regulations) a Help to Buy: ISA, or determines that a Help to Buy: ISA is “eligible for the relief in paragraph (2)” of Regulation 4B(1) of the ISA Regulations (as the term “eligible for the relief in paragraph (2)” is used under and for the purposes of Regulation 4B(1) of the ISA Regulations), an Eligible Customer shall remain entitled to claim a Bonus in respect only of amounts paid into, and that remain in, that Help to Buy: ISA, following the application by HMRC of such relief.
    Regulation 4B says

    1) Where -
    (a) an account investor, within the same year -
    (i) subscribes to a cash account,
    (ii) then closes it (“the closed account”), and
    (iii) subsequently first subscribes to another cash account, and

    (b) the closed account was (apart from under this regulation) exempt from tax under regulation 22(1), the earliest account in that year to fall within the terms of sub-paragraph (a)(iii) (the “first later account”) shall be eligible for the relief in paragraph (2).

    (2) The first later account shall be treated, as from the date of the first subscription to it mentioned in paragraph (1)(a)(iii) as complying with the conditions of regulation 4(1B)(a) in the same manner as the closed account.

    (3) In this regulation, an account is closed where -
    (a) the account investor withdraws from the account all account investments, other proceeds in respect of such investments and cash, representing subscriptions to the account (and closure shall be treated as occurring at the date of such withdrawal), and
    (b) no further subscriptions to the account are made during the remainder of the year, after such withdrawal.
    Last edited by isasmurf; 09-06-2017 at 10:23 PM.
    • eskbanker
    • By eskbanker 10th Jun 17, 12:28 AM
    • 5,611 Posts
    • 5,451 Thanks
    eskbanker
    • #6
    • 10th Jun 17, 12:28 AM
    • #6
    • 10th Jun 17, 12:28 AM
    Thanks for the reply and the info.

    It was in December 2015 when she closed down one ISA, then opened another one because it had a better interest rate. All this was done online, she said she wasn't asked to declare anything.

    She had approx £1200 in her account at that time.
    Originally posted by MrsJam
    The scheme only started in December 2015 and it was indeed possible to have paid £1200 into a new HTB in that month. However, the published FAQ at https://www.helptobuy.gov.uk/help-to-buy-isa/faq/#919a24ea-e1f7-648f-8ce9-ff0000ad17aa clearly states:
    If I close my account, can I open a new Help to Buy: ISA?
    If you hold a Help to Buy: ISA, and close it without claiming your government bonus, you can open a new account in the following tax year (provided the new account is opened before 30 November 2019).
    so if she closed her newly-opened account in December 2015, she should have been able to open a new one in April 2016. However, starting one from £0 in April 2016, it wouldn't have been possible to reach £4600 (for a £1150 bonus) by June 2017, so something doesn't add up - if the second account was opened before April 2016 (having already opened one in December 2015) then there should have been a declaration about not having contributed to a cash ISA in tax year 2015/16.

    Opening online doesn't make any difference, the account holder is still responsible for ticking a box (or the equivalent) to say that they've adhered to the relevant Ts & Cs....
    • MrsJam
    • By MrsJam 11th Jun 17, 12:10 AM
    • 112 Posts
    • 148 Thanks
    MrsJam
    • #7
    • 11th Jun 17, 12:10 AM
    • #7
    • 11th Jun 17, 12:10 AM
    Thank you all for the replies,

    Will pass this onto her.
    • atush
    • By atush 11th Jun 17, 9:33 AM
    • 16,300 Posts
    • 9,969 Thanks
    atush
    • #8
    • 11th Jun 17, 9:33 AM
    • #8
    • 11th Jun 17, 9:33 AM
    Why didn't she transfer it rather than close it down?
    Originally posted by Ed-1
    Yes, the proper procedure with ISAs is to get the new ISA to transfer the money in from the old isa.

    If you close it yourself, you lose out.
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