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    • jonjomaher
    • By jonjomaher 13th Feb 18, 4:50 PM
    • 4Posts
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    jonjomaher
    Help to Buy transfer or cash out to Lifetime ISA
    • #1
    • 13th Feb 18, 4:50 PM
    Help to Buy transfer or cash out to Lifetime ISA 13th Feb 18 at 4:50 PM
    Hello,

    I currently have both a Lifetime and Help to Buy ISA, both opened tax year 2017/2018. I don't plan to buy until the end of this year when the Lifetime ISA has matured, but the Lifetime ISA is with Skipton and understand that I need to submit my transfer application by the 1st March to ensure the transfer is completed this tax year.

    I am wondering; however, given that I cannot benefit from the loophole, as all my Help to Buy savings were made this year, are there any issues with just withdrawing the money from the help to buy ISA and paying it in to the lifetime ISA, instead of transferring the Help to Buy ISA? An extra month or so of higher rate interest wouldn't be bad.
Page 1
    • eskbanker
    • By eskbanker 13th Feb 18, 7:20 PM
    • 6,261 Posts
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    eskbanker
    • #2
    • 13th Feb 18, 7:20 PM
    • #2
    • 13th Feb 18, 7:20 PM
    You could just leave it in the HTB for the higher interest rate right up until the month before you need it, and transfer it to the LISA at that stage, assuming you're not already using all your £4K 2018/19 LISA allowance in the new tax year....
    • jonjomaher
    • By jonjomaher 14th Feb 18, 10:02 AM
    • 4 Posts
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    jonjomaher
    • #3
    • 14th Feb 18, 10:02 AM
    • #3
    • 14th Feb 18, 10:02 AM
    Hi eskbanker,

    That was what I was thinking, but I was trying to think if there were any implications in me just manually withdrawing the money from the HTB ISA and paying it into the Lifetime ISA?
    • eskbanker
    • By eskbanker 14th Feb 18, 12:49 PM
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    eskbanker
    • #4
    • 14th Feb 18, 12:49 PM
    • #4
    • 14th Feb 18, 12:49 PM
    Withdrawing and paying in has a few disadvantages over transferring but they're minor and may not be an issue for you at all:
    • You'd be using up some of your annual ISA contribution allowance unnecessarily, but that's only an issue if you're planning on fully subscribing up to the £20K
    • When transferring between ISAs, the two providers work in step to ensure that your money is always earning interest, whereas doing it manually you'd be likely to lose out on a (brief) period in limbo
    • Convenience: letting the two providers sort it out directly between them is less hassle for most!
    And just to reiterate, whichever route you choose, there's no need to do this by the end of this tax year....
    • jonjomaher
    • By jonjomaher 15th Feb 18, 1:54 PM
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    jonjomaher
    • #5
    • 15th Feb 18, 1:54 PM
    • #5
    • 15th Feb 18, 1:54 PM
    Hi eskbanker,

    Sorry I missed your last point.

    I'll describe my situation and then perhaps you could advise?

    So... I aim to save £4k this tax year and £4k next tax year and then depending when I find a house to purchase, potentially £4k the tax year after, in order to max out the amount of Lifetime ISA bonus available.

    To do that, I have opened a Help to Buy ISA and have been paying in the maximum amount each month, but I didn't start until about July, so I don't have the maximum amount in there. The value of houses where I am means that the Help to Buy threshold is too low, so I need the higher threshold of the Lifetime ISA.

    My plan was to transfer all the money from the Help to Buy ISA into the Lifetime ISA before the end of this tax year and then top it up to the maximum allowance and then keep my savings for next tax year in a separate higher interest account, then transfer in to the Lifetime ISA just before the end of the next tax year.
    • Alexland
    • By Alexland 15th Feb 18, 9:29 PM
    • 1,594 Posts
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    Alexland
    • #6
    • 15th Feb 18, 9:29 PM
    • #6
    • 15th Feb 18, 9:29 PM
    Yes as you have no previous HTB ISA contributions from last tax year and assuming you are not using anywhere near the full £20k ISA contribution allowance this year it would be easiest to withdraw the HTB ISA money back to your bank and deposit £4k if you have it into your Skipton LISA for this tax year before 6th April.

    HTB ISA to LISA transfers are not convenient due to the earned interest issue.

    Yes in subsequent years it makes sense to make the LISA contribution towards the end of the tax year but leave enough time to resolve any unexpected issues.

    Remember the LISA needs to be open 12 months from the initial contribution before it can be used without penalty for a qualifying property purchase.

    Alex
    • eskbanker
    • By eskbanker 16th Feb 18, 12:19 AM
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    eskbanker
    • #7
    • 16th Feb 18, 12:19 AM
    • #7
    • 16th Feb 18, 12:19 AM
    HTB ISA to LISA transfers are not convenient due to the earned interest issue.
    Originally posted by Alexland
    Surely this isn't relevant for someone with a HTB opened during 2017/18?

    OP - the point I was making is that you should consider how best to use each tax year's £4K LISA allowance and if, for the sake of argument, you could already fill the 2017/18 LISA allowance without using your HTB money then it may make sense to keep the HTB going into the next tax year, in order to benefit from the higher interest rate for longer.
    • jonjomaher
    • By jonjomaher 16th Feb 18, 8:02 PM
    • 4 Posts
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    jonjomaher
    • #8
    • 16th Feb 18, 8:02 PM
    • #8
    • 16th Feb 18, 8:02 PM
    Great, thanks both of you for your help. If I can afford to keep some money in the help to buy for the interest I will, but I'll make sure I get the full £4k in the Lifetime this year first.
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