Help to Buy ISA guide

SMG1988

Hi there,
I'm a bit confused about not being allowed to open a second cash ISA in the same tax year.
I've recently started paying into a Help to Buy ISA and I'm paying into a separate ISA also. The second ISA existed years before I started paying into the Help to Buy ISA. My worry is that at the same time of opening the Help to Buy, I also changed by existing ISA to take advantage of a better rate that was available to me. I believe it's the same account number and details as before and I have the same passbook, but I'm a little concerned that this would count as opening a second ISA?
Any advice/suggestions are more than welcome.
Thank you

badger09

SMG1988 wrote: »

Hi there,
I'm a bit confused about not being allowed to open a second cash ISA in the same tax year.
I've recently started paying into a Help to Buy ISA and I'm paying into a separate ISA also. The second ISA existed years before I started paying into the Help to Buy ISA. My worry is that at the same time of opening the Help to Buy, I also changed by existing ISA to take advantage of a better rate that was available to me. I believe it's the same account number and details as before and I have the same passbook, but I'm a little concerned that this would count as opening a second ISA?
Any advice/suggestions are more than welcome.
Thank you

There is no rule about not being allowed to open a second cash ISA in the same tax year. The rule is about paying into more than one cash ISA.

Unless the 'separate' cash ISA which you are paying into, and your HTB ISA are with one of the few providers to have 'split ISAs' eg Nationwide, then you have broken the HMRC ISA rule.

It doesn't matter how long ago that 'separate' cash ISA was opened, or whether it has the same account number - you cannot pay into 2 cash ISAs at the same time (except split ISAs as above).

Ashen

masonic wrote: »

Either they can start paying £200 per month into the Halifax HTB ISA by standing order (forfeiting the initial lump sum), or close the Halifax account and open a new HTB ISA elsewhere.

Thanks, I will advise him to do that. I wasn't sure because the site says 'you need to make a deposit within 21 days' sounding like an absolute requirement. It won't let him transfer manually, hopefully a SO will work then.

jackmack26

eskbanker wrote: »

Poor choice of wording perhaps - as above the same word can be used for multiple things so either you're choosing to interpret it one way when they mean another or they've erred in their documentation. Which provider and do you have a link to where they say this?

It sounds like you don't really need any help to buy then!

Why don't you just reduce the amount of the mortgage (or equity loan) you're taking out?

Sorry can't post links.

Halifax Help to Buy ISA:
Conditions for bonus payment?
We don’t offer a bonus on the account but the Government will offer a 25% bonus on closure of this account if the funds are used as a deposit to buy your first property (based on eligibility).

The official Government Help to Buy website:
Can I use the Help to Buy: ISA government bonus for the deposit when I exchange contracts for my house purchase?
The Help to Buy: ISA bonus must be claimed on your behalf by a solicitor or conveyancer in anticipation of the completion date. The bonus must be included with the funds consolidated at the completion of the property transaction. The bonus cannot be used for the deposit due at the exchange of contracts, to pay for solicitor’s, estate agent’s fees or any other indirect costs associated with buying a home.

Shall I make a formal complaint on the basis of erred in the Halifax documentation?

It is not about whether I need help to buy ISA bonus or not, it is about misleading information advertised surrounding the help to buy ISA by Halifax. If they have advertised it clearly then I wouldn't have accounted 25% bonus as a part of my deposit. I'm able to reduce the equity loan but effectively I will be raising more deposit than I need to, so that I can take advantage of Help to buy ISA bonus now.

masonic

jackmack26 wrote: »

Sorry can't post links.

Halifax Help to Buy ISA:
Conditions for bonus payment?
We don’t offer a bonus on the account but the Government will offer a 25% bonus on closure of this account if the funds are used as a deposit to buy your first property (based on eligibility).

The official Government Help to Buy website:
Can I use the Help to Buy: ISA government bonus for the deposit when I exchange contracts for my house purchase?
The Help to Buy: ISA bonus must be claimed on your behalf by a solicitor or conveyancer in anticipation of the completion date. The bonus must be included with the funds consolidated at the completion of the property transaction. The bonus cannot be used for the deposit due at the exchange of contracts, to pay for solicitor’s, estate agent’s fees or any other indirect costs associated with buying a home.

Shall I make a formal complaint on the basis of erred in the Halifax documentation?

Those are two different deposits. The bonus cannot be used for the deposit due at the exchange of contracts - it must be used for the deposit paid at completion. The statement made by Halifax is entirely consistent with that from the Government website. Halifax has just put it in slightly different terms.

It is not about whether I need help to buy ISA bonus or not, it is about misleading information advertised surrounding the help to buy ISA by Halifax. If they have advertised it clearly then I wouldn't have accounted 25% bonus as a part of my deposit. I'm able to reduce the equity loan but effectively I will be raising more deposit than I need to, so that I can take advantage of Help to buy ISA bonus now.

You've used the word "deposit" in the same way as Halifax in the second part of your statement above, so is it really so misleading? What else should it be called, if not "deposit"?

Quite frankly I don't know what you are upset about. You'll benefit from the 25% bonus by either paying less for your home out of your own pocket or borrowing less. What difference does it make if the money is paid a few weeks later (and goes towards a later expense) than you anticipated? The net cost to you is the same regardless. You currently have all of the funds you need minus the bonus to complete the purchase, yes?

Meesa-ISA

Quite an interesting thing has happened.

I reduced the current year funds in my existing cash ISA to under £1,000 by moving them into my current account. I then opened a Halifax HTB ISA and requested a transfer of my entire current year funds from the cash ISA into the new HTB ISA. As part of this process I was asked how much I had paid into this cash ISA this year and I answered truthfully (i.e. I did not exclude the amount that I had withdrawn) with around £1,300.

What I expected was that this would be worked out for me, that is to say the two banks between them would work out that I had less than £1,000 of current year funds remaining in the account, and only transfer that amount. And of course, Halifax say they will only transfer up to £1,000 and the HTB ISA rules say only £1,200 total can be transferred into the account during the first month.

In reality, they have simply moved £1,300 into my HTB ISA. So it seems like I have inadvertently broken the rules

I suppose Halifax should be my first port of call here - explain what's happened and ask them what to do?

masonic

Meesa-ISA wrote: »

Quite an interesting thing has happened.

I reduced the current year funds in my existing cash ISA to under £1,000 by moving them into my current account. I then opened a Halifax HTB ISA and requested a transfer of my entire current year funds from the cash ISA into the new HTB ISA. As part of this process I was asked how much I had paid into this cash ISA this year and I answered truthfully (i.e. I did not exclude the amount that I had withdrawn) with around £1,300.

What I expected was that this would be worked out for me, that is to say the two banks between them would work out that I had less than £1,000 of current year funds remaining in the account, and only transfer that amount. And of course, Halifax say they will only transfer up to £1,000 and the HTB ISA rules say only £1,200 total can be transferred into the account during the first month.

In reality, they have simply moved £1,300 into my HTB ISA. So it seems like I have inadvertently broken the rules

I suppose Halifax should be my first port of call here - explain what's happened and ask them what to do?

That is very surprising. Halifax would be the ones to contact. It would be worth stressing to them that you subscribed £1,300, then flexibly withdrew £300, so your net current year subscriptions were £1,000 at the time of the transfer.

Try to speak to someone at Halifax who specialises in ISAs, because this situation is not clear cut and I don't think there is HMRC guidance for a situation like this.

An outcome you could suggest is that they return £100-£300 of previous year subscriptions to your original ISA, but they might not be in a position to take any action without consulting HMRC.

Bear in mind it's also possible that your original ISA provider miscalculated your net current year subscriptions and Halifax may need to take this up with them.

MissGoscomb

Hi,

I have been paying into a Help to Buy ISA since January but, due to moving rented homes, want to look after the money in my current account a little bit. Therefore I was wondering if it is possible to take a break from paying into the ISA? I only want to do it for two months until my finances have settled.

Any help would be fabulous - the lady in my local NatWest wasn't really sure and I can't find anything about it online.

Thank you!

masonic

There is no obligation to pay into a HTB ISA every month (unless your ISA provider has a specific requirement about this - but I'm not aware of any that do). Of course, you wouldn't be able to make extra payments later to compensate for those you've missed.

Meesa-ISA

masonic wrote: »

That is very surprising. Halifax would be the ones to contact. It would be worth stressing to them that you subscribed £1,300, then flexibly withdrew £300, so your net current year subscriptions were £1,000 at the time of the transfer.

Try to speak to someone at Halifax who specialises in ISAs, because this situation is not clear cut and I don't think there is HMRC guidance for a situation like this.

An outcome you could suggest is that they return £100-£300 of previous year subscriptions to your original ISA, but they might not be in a position to take any action without consulting HMRC.

Bear in mind it's also possible that your original ISA provider miscalculated your net current year subscriptions and Halifax may need to take this up with them.

Update on this: I just logged on to online banking as I was about to call Halifax, and I now see that my balance has been reduced to £1,200 via a transaction to 'HTB REPAIR' of the excess. I expect to see this in my cash ISA next week, though there's no sign of it yet. I now don't see the need for me to take any action unless this money doesn't turn up anywhere else!

Thanks, though.