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    • Gordon the Moron
    • By Gordon the Moron 3rd Dec 17, 1:48 PM
    • 1,400Posts
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    Gordon the Moron
    Hmmmm?!?!? LISA rules
    • #1
    • 3rd Dec 17, 1:48 PM
    Hmmmm?!?!? LISA rules 3rd Dec 17 at 1:48 PM
    I have a lifetime cash ISA with Skipton which I have recently transferred my Nationwide H2BISA into.

    Something odd has happened!

    I opened the H2B in December 2015 when they launched and paid the maximum into it every month from opening (£1200 then £200 each month) until November 2017 when I did the transfer.

    Skipton have told me that Nationwide told them when I did the transfer all the money that was paid in was from previous year's allowance (i.e. I had not contributed this year) what a load of rubbish I thought, I rang both Nationwide and Skipton and they told me I must be confused as this was right... when I then turned round and said OK then how did my H2B have a balance of over £5900 when I transferred it? How could I have put that much in it without contributing this tax year or earning an interest rate of around 40%?

    At this point they realised something was wrong as I must have paid in this year, they have now come back to me and explained what has happened!

    I had a cash ISA and H2B split with Nationwide in 2016/2017 maxed out

    In early April this year I emptied the cash ISA into a bunch of high interest current accounts but left the H2B alone (Nationwide ISAs are flexible) I then carried on paying into the H2B whilst leaving the cash ISA empty.

    Apparently by taking the money out of the cash ISA I've withdrawn previous year's allowance, by paying back into the H2B I have been "replacing the previous year's allowance" and haven't used up any of this year's allowance.

    Skipton and Nationwide are now telling me I can pay the full £4000 into the LISA for this year on top of the money I put into the H2B.

    Is this actually legal? It certainly isn't what I set out to do it was an unintended side effect of emptying the cash ISA. If it is within the letter of the rules it certainly doesn't seem within the spirit of them, I've not filled my "allowance" with Skipton yet, I just wonder if HMRC will be happy with this?
    If you don't like what I say slap me around with a large trout and PM me to tell me why.

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Page 1
    • AirlieBird
    • By AirlieBird 3rd Dec 17, 3:18 PM
    • 743 Posts
    • 526 Thanks
    AirlieBird
    • #2
    • 3rd Dec 17, 3:18 PM
    • #2
    • 3rd Dec 17, 3:18 PM
    What they are saying would be correct for any ISA/transfer outside a LISA. However, I do note the guidance notes are very careful to refer to "the amount held" in the HTB ISA at 5 April 2017, rather than 2017/18 subscriptions. They say

    Any funds transferred from a Help to Buy: ISA to a Lifetime ISA that are:
     In excess of the amount held in the Help to Buy: ISA as at 5 April 2017,

     Transferred from a Help to Buy: ISA after the single transfer described above has taken place, or
     Transferred in 2018/19 or subsequent years
    will be current year payments which will count towards the annual Lifetime ISA payment limit.


    The key here, being the first point. While they are both correct that you have not subscribed to your HTB ISA this year, I read this as the balance transferred that is higher than the balance at 5 April 2017 counts against your LISA allowance for 2017/18.

    The wording in the legislation also refers to the balance at 5th April 2017:
    "the first or only transfer from a Help to Buy ISA... to a Lifetime ISA in the year 2017-18 in an amount not exceeding the balance on the Help to Buy ISA as at 5th April 2017 plus accrued interest.”.

    You're probably best ringing HMRC's ISA helpline
    Last edited by AirlieBird; 03-12-2017 at 4:28 PM. Reason: Add isa helpline
    • Gordon the Moron
    • By Gordon the Moron 3rd Dec 17, 3:58 PM
    • 1,400 Posts
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    Gordon the Moron
    • #3
    • 3rd Dec 17, 3:58 PM
    • #3
    • 3rd Dec 17, 3:58 PM
    Where did you find the guidelines you quoted?

    The link to HMRC just returns an error 404? Do you know what the number is?
    Last edited by Gordon the Moron; 03-12-2017 at 4:05 PM.
    If you don't like what I say slap me around with a large trout and PM me to tell me why.

    If you do like it please hit the thanks button.
    • Gordon the Moron
    • By Gordon the Moron 3rd Dec 17, 4:22 PM
    • 1,400 Posts
    • 714 Thanks
    Gordon the Moron
    • #4
    • 3rd Dec 17, 4:22 PM
    • #4
    • 3rd Dec 17, 4:22 PM
    I asked both Skipton and NW if the interest earned after April 6th this year whilst it was in the H2B would count towards the 4k limit. Both told me no. That would now appear wrong too.
    If you don't like what I say slap me around with a large trout and PM me to tell me why.

    If you do like it please hit the thanks button.
    • AirlieBird
    • By AirlieBird 3rd Dec 17, 4:24 PM
    • 743 Posts
    • 526 Thanks
    AirlieBird
    • #5
    • 3rd Dec 17, 4:24 PM
    • #5
    • 3rd Dec 17, 4:24 PM
    Guidance for ISA managers, paragraph 9B.17
    https://www.gov.uk/government/publications/guidance-notes-for-isa-managers

    Legislation
    https://www.legislation.gov.uk/ukdsi/2017/9780111154618/regulation/21/data.xht?view=snippet&wrap=true

    I've corrected the helpline link above
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