Help to Buy ISA guide

Alexland

Zaphod42 wrote: »

I seem to remember a note on the HTB ISA guide earlier this year, when it covered the ability to transfer a HTB ISA to a Lifetime ISA and gain extra bonus money on 16/17 contributions, that if you transferred but then ended up wanting to buy a house within 17/18, you could still access that original HTB money penalty free?

It was part of an explainer about what choice to make if you didn't know for sure if you were buying within a year, because of course you can't use the LISA for 12 months. Does this ring a bell with anyone or did I dream it (would be a weird and very boring dream...)?

As a result of the transfer your old HTB ISA provider should have given you a closure statement which would allow your solicitor to claim the HTB bonus for 12 months however the withdrawal from the LISA would now be subject to a penalty worth 25% of the withdrawn amount. The LISA withdrawal penalty didn't apply last tax year.

Alex.

globetrotter88

I am thinking of gifting some money to an adult child who may then want to put some of the money into an ISA. If they do, will the income they make from the ISA still be tax free? I read elsewhere that any income from it may be counted as mine for income tax purposes.

masonic

globetrotter88 wrote: »

I am thinking of gifting some money to an adult child who may then want to put some of the money into an ISA. If they do, will the income they make from the ISA still be tax free? I read elsewhere that any income from it may be counted as mine for income tax purposes.

This is the case until your child is an adult (it's subject to an allowance), but adult children only need to be concerned with potential inheritance tax if you were to die within 7 years. See https://www.gov.uk/inheritance-tax/gifts

AGeorge

I have a halifax Help to Buy, the interest rates are going to drop this year. Am I able to switch providers in the same financial year and pay in? I went to Barclays and they advised me I would not be able to pay in this year as I’ve been paying to Halifax Help to buy isa. Please advise.

eskbanker

AGeorge wrote: »

I have a halifax Help to Buy, the interest rates are going to drop this year. Am I able to switch providers in the same financial year and pay in? I went to Barclays and they advised me I would not be able to pay in this year as I’ve been paying to Halifax Help to buy isa. Please advise.

You can't pay into multiple ISAs of the same type in the same tax year unless you transfer over your old one using the receiving provider's ISA transfer process, so you can transfer the Halifax one to Barclays and continue contributions (to Barclays) thereafter.

thebfjj

Hi,

I am looking into setting up a help to buy ISA to try and get as much of the bonus as possible. I note that it can't be bought to be rented out.

I currently live in a manse that is provided with my job. So in buying the house, it would be for my family in the long term, but we wouldn't be moving into imminently. We would hope to rent it out if possible until we need it.

Could you advise on this, please? It is a fairly unusual scenario as we would be buying the house to be our home and it would be our own home address as we live in a house that belongs to my job. But it wouldn't technically be a change in circumstance. Thanks for the help. It was a very helpful article.

eskbanker

thebfjj wrote: »

I am looking into setting up a help to buy ISA to try and get as much of the bonus as possible. I note that it can't be bought to be rented out.

I currently live in a manse that is provided with my job. So in buying the house, it would be for my family in the long term, but we wouldn't be moving into imminently. We would hope to rent it out if possible until we need it.

Could you advise on this, please? It is a fairly unusual scenario as we would be buying the house to be our home and it would be our own home address as we live in a house that belongs to my job. But it wouldn't technically be a change in circumstance. Thanks for the help. It was a very helpful article.

The FAQ seems pretty unequivocal on this, at https://www.helptobuy.gov.uk/help-to-buy-isa/faq/#a29a24ea-e1f7-648f-8ce9-ff0000ad17aa:

Do I have to live in the home I am buying?
Yes. This must be your only home, and cannot be rented out or used as a holiday home.

The MSE article that this thread was set up to cover does link to a discussion piece where various theoretical scenarios are explored, but they're all predicated on initially moving in, so to me buying a property and then not moving into it looks to be a clear breach of the quoted FAQ statement.

There's also the issue of the mortgage, in that you'd need a buy-to-let mortgage if you were planning to rent it out, and this would make it obvious that you weren't compliant with the HTB ISA rules.

beevee

I am in the process of buying my first house. We haven’t exchanged contracts yet. I have had a HTB ISA since Dec 2015. I did a lot of reading at the time and have read the guide recently when starting to look for properties. Without the ISA bonus, I don’t quite have the 10% deposit. With the bonus, I’ll have more than the 10% deposit. I think the vendor would accept 7.5% at exchange, but what if he doesn’t? Does this mean I have to pay more than the 10% on completion, or can the bonus be used for other bits and bobs other than the deposit? I’ve not been sure who to ask about this, I asked my solicitor but they just gave me a list of eligibility for a help to buy isa .... !!!128584;. I hope this is the right place for the question!

Alexland

Hi beevee,

Your (unhelpful) solicitor will claim the HTB ISA bonus but it cannot be used towards the exchange deposit - only against the final payment as part of your overall mortgage deposit. So you will need enough money before bonus to pay the exchange deposit whatever your solicitor can negotiate.

Alex

baguettes

Hi all,
In a bit of a pickle. I have had my conveyancer apply for my HTB ISA bonus and received a rejection. The situation is:

Way back I started a Lloyds HTB ISA and put in £200. The next day I saw Nationwide had a better interest rate so withdrew my £200 and transferred it to a new Nationwide HTB ISA then continued to save only with Nationwide until applying for the bonus. I neglected to close the Lloyds HTB, which is my mistake.

Is there any way I can get around this mistake and receive my bonus?