Help to buy ISA confusion

veryintrigued

Just noticed the thread title.


I thought it was a crowdfunding initiative to buy ISA confusion!


Help to buy ISA confusion

eskbanker

Archi_Bald wrote: »

Closing an ISA doesn't erase the records that say you paid into an ISA this financial year.

Theoretically, clauses 12.30 onwards about "self repair" in the ISA Guidance Notes could apply if you closed an earlier cash ISA. But I couldn't say for certain, and there's next to no info about HTB ISAs available so far.

As the ISA reporting is a pretty well-oiled engine, they will find out that you had an ISA already this year, and I wouldn't chance things without having got confirmation from the HMRC. Try the ISA Helpline on 0300 200 3312

Not sure what's behind their confidence but the MSE piece asserts:

If you already have money in a cash ISA this year and want to open a Help to Buy ISA, there are a number of options available to you:

You can withdraw any money you put in a cash ISA this year (and interest from it), then open up a new Help to Buy ISA.

kllk_2011

eskbanker wrote: »

Assuming 'swapping the ISA over' means opening a new one and transferring the proceeds in, then yes, you've opened a new one. However, if it only contains prior year funds (i.e. you haven't paid new money into it since 6 April) then this doesn't affect anything to do with this year's allowance or prevent you from opening an HTB ISA.

I don't believe any escalation or indexation has been considered (or at least published) yet.

The general principle continues to apply, i.e. that all current year cash ISA contributions need to be in the same place, so no, you can't put new money into an HTB and a normal cash ISA in the same tax year.

Thanks - very helpful.

I rang the bank re. my ISA allowance and two different people said I consolidated my ISA using last years funds so I could open a HTB ISA in December but they didn't seem confidently sure, just that my limit is the maximum amount less however much I have paid in this year. What would happen if I tried to open it but wasn't entitled - I would hate to open it when it's not actually allowed - I just wish there was a way I could find out a definitive answer!!

Also, on the Nationwide website it quotes:

"In addition, Britain’s biggest building society is the only major savings provider that currently allows its customers to choose more than one type of cash ISA product within the Nationwide ISA portfolio, which can be combined under a single Nationwide ISA wrapper, up to the annual ISA limit of £15,240. This means that Nationwide savers can keep investing in Nationwide cash ISA products, subject to limits, as well as contributing up to £200 a month to the Nationwide Help to Buy ISA."

I'm completely confused!

eskbanker

Have you made any new contributions into a cash ISA since 6 April 2015 (as opposed to transferring previous years' funds)?

Are your cash ISA funds with Nationwide?

kllk_2011

Yes and yes!

eskbanker

....in which case, since Nationwide are the exception to the usual rule (you did say previously that you'd rung "the bank", but as per your quote Nationwide are a building society), you can open an HTB cash ISA with them as well as your existing one, subject to the overall annual limit of £15,240 for contributions.

c0nfused_2

eskbanker wrote: »

....in which case, since Nationwide are the exception to the usual rule (you did say previously that you'd rung "the bank", but as per your quote Nationwide are a building society), you can open an HTB cash ISA with them as well as your existing one, subject to the overall annual limit of £15,240 for contributions.

didn't want to start a new thread but was hoping to get some clarification (as I too just get more confused the more I read):

I'm also hoping I will be buying my first place mid-2016. So the Help To Buy ISA sounds great, however I'm unclear on a number of points:

• as I have an existing ISA and have paid into it in the current financial year, does that mean I point blank cannot open a Help to Buy until April? (it's not a nationwide ISA so I can't transfer in)
• if this is the case and I had to wait to open the ISA in April, and I went with the Nationwide joint-ISA option (mentioned above) does this mean that as well as then not being able to pay in to my existing ISA I would not be able to withdraw from it (this is something that I try to avoid, but is a big plus of my current ISA)? But I could leave this account open (or could transfer it prior to April to something with a better interest rate and let it sit there (as Nationwide don't accept non-Nationwide transfers (and this would leave me with a crappy interested rate anyway))?
• regardless of this, does the Help To Buy basically limit people with any bank other than nationwide from saving more than £200 a month?

If I did end up with my existing ISA (with deposits/withdrawals no longer being made) and a Nationwide Save to Buy and gov Help to Buy ISAs would there be issues trying to withdraw money from these multiple accounts? If I did end up in this position at the point of buying a place I'd probably be using the full balance (and I guess therefore closing) the two (hypothetical) Nationwide ISAs, and using some of the money from my current ISA - would the fact that I'd been contributing to Nationwide in 2016 mean I wouldn't be able to withdraw any money from my existing one, or would this be ok once they were closed?

Apologies if any of that doesn't make sense, but if anyone can provide any clarification it would be HUGELY appreciated. Thanks!

eskbanker

c0nfused wrote: »

I'm also hoping I will be buying my first place mid-2016. So the Help To Buy ISA sounds great

It depends on your definition of 'great' - those who gain the most from HTB ISAs will be those saving over a number of years, but if you're anticipating buying within about six months from the scheme starting you'll only be looking at a bonus of about £600. Better in your pocket than the government's but not exactly life-changing in the general scheme of things....

c0nfused wrote: »

as I have an existing ISA and have paid into it in the current financial year, does that mean I point blank cannot open a Help to Buy until April? (it's not a nationwide ISA so I can't transfer in)

Point #7 of the MSE article linked earlier suggests that closure of an existing current-year cash ISA and opening an HTB one is possible, also it states that you can transfer it into an HTB ISA if this year's contributions are below £1,200, irrespective of whether it's with Nationwide (assuming transfers in are allowed by the product you have in mind).

c0nfused wrote: »

does the Help To Buy basically limit people with any bank other than nationwide from saving more than £200 a month?

No, there are many alternative ways of saving other than cash ISAs, many of which give significantly better returns!

MARTYM8`

c0nfused wrote: »

• as I have an existing ISA and have paid into it in the current financial year, does that mean I point blank cannot open a Help to Buy until April? (it's not a nationwide ISA so I can't transfer in)
• if this is the case and I had to wait to open the ISA in April, and I went with the Nationwide joint-ISA option (mentioned above) does this mean that as well as then not being able to pay in to my existing ISA I would not be able to withdraw from it (this is something that I try to avoid, but is a big plus of my current ISA)? But I could leave this account open (or could transfer it prior to April to something with a better interest rate and let it sit there (as Nationwide don't accept non-Nationwide transfers (and this would leave me with a crappy interested rate anyway))?
• regardless of this, does the Help To Buy basically limit people with any bank other than nationwide from saving more than £200 a month?

If I did end up with my existing ISA (with deposits/withdrawals no longer being made) and a Nationwide Save to Buy and gov Help to Buy ISAs would there be issues trying to withdraw money from these multiple accounts? If I did end up in this position at the point of buying a place I'd probably be using the full balance (and I guess therefore closing) the two (hypothetical) Nationwide ISAs, and using some of the money from my current ISA - would the fact that I'd been contributing to Nationwide in 2016 mean I wouldn't be able to withdraw any money from my existing one, or would this be ok once they were closed?

Apologies if any of that doesn't make sense, but if anyone can provide any clarification it would be HUGELY appreciated. Thanks!

Seems Nationwide does allow you to combine a help to buy ISA with other ISAs.

http://www.nationwide.co.uk/support/support-articles/important-information/help-to-buy-isa


Answer to your first question yes - although you could transfer your ISA to Nationwide to get round the problem! Their save to buy ISA allows transfers in I believe but only from another NW ISA or account - so you would need to transfer in first to another NW ISA product and then switch in branch to the save to buy product. You can then open a help to buy ISA on top of these other ISAs with NW. However it can only be opened in branch.

http://www.nationwide.co.uk/support/support-articles/faqs/save-to-buy-isa-manage-your-account-faqs#xtab:twistyitem16-how-much-cashback-reward

Not aware that any other banks/Bsocs allow this multi ISA investment - and certainly none of the other big providers offering help to buy ISAs do.

I would therefore combine the NW HTB Isa with their save to buy ISA - the latter allows you to save up to £20k (within the ISA investment limits) but you must pay in £50 a month to earn the 2% interest offered. If the balance goes above 2% you only earn 0.25% on the excess but if you also utilise their 5% deposit save to buy mortgages you can get even more cashback (up to £1k currently if you have more than £10k in the save to buy product). If you do take out a mortgage with NW they also pay £500 to first time buyers on top - so you could get a further £1500 to top up your government help to buy isa scheme if an NW mortgage looks right for you.

http://www.nationwide.co.uk/products/savings/save-to-buy-isa/features-and-benefits

You can close the save to buy ISA at any time - or transfer it - without penalties. You just benefit from the 2% rate - and don't of course get the bonuses on top if you had taken out an NW mortgage.

If you close your help to buy ISA (or transfer the funds to another ISA) without buying a property you again will just earn the interest paid on the account to that date – all you will lose is the bonus from the taxman towards your mortgage.

So given the ability to combine with other cash ISAs Nationwide would seem to be the best bet if you want an HTB isa (particulary if you combine it with their save to buy ISA paying a very healthy 2% on what is effectively instant access).

Hope this is clear - the government don't make this easy for a product meant to be targeted at less savvy/younger investors.

smile88egc

Where the flip are these help to buy ISAs anyway, I haven't seen anything advertised and have put off opening an ISA this year (using high interest current account instead for now), waiting for one.......

Ho hum.