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  • FIRST POST
    • Emmalh2
    • By Emmalh2 7th Feb 18, 3:35 PM
    • 1Posts
    • 0Thanks
    Emmalh2
    Paying into a H2B ISA and a LISA in 17/18 tax year
    • #1
    • 7th Feb 18, 3:35 PM
    Paying into a H2B ISA and a LISA in 17/18 tax year 7th Feb 18 at 3:35 PM
    Hi all,

    I'm planning to transfer my Help To Buy ISA (H2B) to my Lifetime ISA (LISA).

    I opened my H2B in December 2015 with the maximum £1200, and have paid in £200 a month ever since.

    I understand that when I transfer the H2B over to the LISA, the amount I saved before April 2017 won't count towards the £4K I can contribute towards the LISA in the 17/18 tax year.

    Therefore, if I were to only transfer this amount, could I transfer over £4000 from a savings account (not an ISA) to max my contribution this tax year?
    (In this scenario I'd leave my H2B open, earning interest on the amount I've contributed since April 2017, and close before buying a property.)

    At the moment, my understanding is that I can't pay into two cash ISA's in the same tax year.

    Alternatively, if I transfer the entire balance of my H2B to the LISA, anything I've paid in since April 2017 will eat into my £4K allowance. Can I then top-up this amount to a total contribution of £4K, using funds from elsewhere?

    Thanks in advance for your help.
Page 1
    • Alexland
    • By Alexland 7th Feb 18, 8:05 PM
    • 1,587 Posts
    • 1,091 Thanks
    Alexland
    • #2
    • 7th Feb 18, 8:05 PM
    • #2
    • 7th Feb 18, 8:05 PM
    Sorry for the delay replying - all our agents were busy.

    Yes if you only transfer the HTB balance at 5th April 17 you can still add the full £4k into the LISA this tax year and use it for a qualifying property purchase after 12 months has passed from the initial LISA (not HTB) contribution. Act quickly before the Skipton cut off at the end of this month.

    You can still continue to the HTB ISA if you find the interest rate attractive (I don't) until you cease to be eligible when you just close the account as you cannot use both HTB and LISA towards a property purchase.

    You cannot pay into 2 Cash ISAs in the same tax year unless you have a Split Cash ISA with the same provider (eg Nationwide) where 1 part is HTB and the other part is Cash.

    A LISA (cash or S&S) is not a type of Cash ISA.

    Alex
    Last edited by Alexland; 07-02-2018 at 8:43 PM.
    • Kim_13
    • By Kim_13 7th Feb 18, 9:21 PM
    • 1,883 Posts
    • 2,021 Thanks
    Kim_13
    • #3
    • 7th Feb 18, 9:21 PM
    • #3
    • 7th Feb 18, 9:21 PM
    To transfer all of your pre 17/18 contributions without them counting towards your LISA allowance, you would need to get the transfer done through the transfer process with the provider in the current tax year. Skipton (the only cash LISA provider) have imposed an earlier deadline of 1 March.

    It is as you talked about in your final paragraph - do the transfer and then top up to the £4,000 for 17/18.

    A Lifetime ISA is a separate type of ISA and you are allowed to contribute to one of each type in each tax year, unless it's a split ISA as above. So if you don't currently have a LISA open (meaning your 12 month clock hasn't started counting down yet) and you may want to buy a property within that year, it may pay to keep the HTB and start a LISA separately (this is allowed but you can only get the bonus from one to buy a property with.)

    You may find the MSE guide to Lifetime ISA's of interest: https://www.moneysavingexpert.com/savings/lifetime-ISAs
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